October 20, 2021

The rollercoaster ride of China pig price

A eFeedLink Hot Topic


From August 2018 to the present, in just three years, the price of China's live pig market has experienced abnormal fluctuations, seeing an increase of as much as four times at one time. However, since the beginning of this year, the price of pigs has fallen back to the where it started three years ago.

In August 2018, China first reported the outbreak of African Swine Fever (ASF), which spread to the entire country within half a year. From an average of 48 million head per month in 2018 slaughter volumes plunged to its lowest level of 15 million in mid-2019, as pig population shrank tremendously.

Monthly pork output plummeted to 2,000 kilotonnes in 2019, which was less than half of the 4,800 kilotonnes in 2018. In the first half of 2020, the low weight of finishing pigs aggravated the situation, dragging the monthly pork output further down to 1,800 kilotonnes, hence resulting in severe shortage of pork supply in China.

The price of live pigs surged from the usual 15 yuan/kg (~US$2.33; 1 yuan = US$0.16) in 2018 to 36 yuan/kg (~US$5.59) before the end of 2019. In 2020, the price of pigs fluctuated in the range of 25-40 yuan/kg (~US$3.88-6.22) amid limited availability. Prices began to soften in early 2021 as the supply of pork increased with imports at a high of 300,000-500,000 tonnes per month. The overall supply of pork has in fact reached 80-90% of typical year levels and the shortage has eased. Prices of live pigs fell from grace, tumbling relentlessly to nearly 11 yuan/kg (~US$1.71) by the end of September 2021. In the northern region prices even dived below 10 yuan/kg (~US$1.55). Some market participants claimed that the price of pigs might fall to 4 yuan/kg (US~$0.62).

Will pig price fall to 4yuan/kg?

However, the downward scope of pig prices will be limited due to several factors.

Pig farmers are bleeding profusely at the current low price. Since the ASF outbreak, the cost of epidemic prevention has surged. In addition, the COVID-19 pandemic has pushed up global grains prices sharply, hence lifting the feed costs of pig farming. In general, pig breeding costs have soared from the usual 13-14 yuan/kg (~US$2.02-2.18) to 17-18 yuan/kg (~US$2.64-2.80) for farms with breeding units.  For smaller farms that purchase piglets, farming costs were as high as 30 yuan/kg (~US$4.66) during early parts of this year.

For farms with breeding units, costs of breeding sows have increased prominently as well. Prices of standard Landrace-Yorkshire sows surged from 1500-2000 yuan/head (~US$233-311) in the past to 6000 yuan/head (~US$932) at the peak of 2019-2020, and pregnant sows were even higher at 10,000 yuan/head (~US$1550).

With ASF risks remaining high and the exorbitant costs of sows, breeder farms kept commercial pigs as breeder sows. This will limit pig production in the longer term. Moreover, the Chinese government is expected to control pork imports in efforts to stabilise tumbling pig prices, hence cutting the supply of pork in the coming period.

Meanwhile, the recent electricity usage control in China has disrupted the production of feed and feed additives on the one hand, and perked up ingredient costs on the hand. Prices of feed and feed additives have started to climb. Unless the problem of power shortages is resolved quickly, the inflationary tide in China will lift pig prices in tandem.

- written by Tao SHI, translated by Seng Keong NGOH


The print version of this article appears in LIVESTOCK & FEED Business November issue.