October 11, 2022

 

Hog futures in China up following rising demand amid tight supply

 

 

Hog futures in China increased 6% on October 10, following rising demand amid tight supply of swine during the week-long National Day holiday, Reuters reported.

 

The most active contract on the Dalian Commodity Exchange, live hogs for January, increased by 5.8% to CNY 23,735 (~US$3,336.71; CNY 1 = US$0.14) per tonne. It was the largest daily gain since hog futures were introduced last year.

 

Wu Li, an analyst at Tianfeng Agriculture, said cooler weather and an increase in holiday consumption boosted demand for fresh meat supplies, driving up daily slaughtering volume.

 

On Sunday, spot prices for hogs reached CNY 26.2 (~US$3.64) per kg, an increase of 8% since September 25. Since March 2021, prices have reached a record high.

 

As Dalian reopened for trading on Monday, futures rallied in response to the sharp increase in spot prices.

 

China's swine production has decreased in recent months as a result of farmers cutting back on breeding due to months of significant losses since last year.

 

As prices rose this year, producers started upping their output once more, but the process takes time, and many are wary due to China's uncertain meat demand as the country's economy slows down.

 

In an effort to lower prices, China's state planner announced that it would release a fresh batch of pork from state reserves.

 

The state planner has attempted to reassure the market that there is an adequate supply and has attributed the shortage to farmers. Additionally, it has laid the blame for stoking market angst on unauthorised media reports.

 

Yuan Song, chief analyst at trading firm Juxing Agriculture Group, predicted additional actions, including possibly increasing sales of pork reserves and asking major producers to make commitments to steady production.

 

Shares of swine producers rose on Monday as well, with top producers Wens Foodstuff Group Co. and Muyuan Foods Co. both rising by 7%.

 

Poultry businesses, which had struggled with losses in the first half of this year, were also helped by the higher hog prices.

 

The daily limit of 10% was reached by shares of the chicken breeders Shandong Yisheng Livestock & Poultry Breeding, Shandong Xiantan Co Ltd, and Shandong Minhe Animal Husbandry.

 

-      Reuters