Pork prices in China are rising fast, and a Rabobank report published by Pig Progress said it is likely that higher prices will dominate4 headlines for some time. It may even take as long as five years for China’s pig production to get back on track.
MASSIVE HERD REDUCTIONS
The bank said the 2019 Chinese hog herd was expected to decrease by about 50% with production falling 25%. Further production cuts of 10% to 15% were forecast for next year.
Specifically, China produced about 54 million tonnes of pork last year. This year, this was expected to drop to about 40 million, Rabobank said. For 2020, estimated pork production could be about 34 million.
If it weren’t for the current tariff war between the US and China, this could be a good deal for US pork exports and US hog producers, an analyst said. This is especially true since about half of the world’s total supply of hogs was located in China, and Rabobank said the losses are such that it will be impossible just to go out and buy replacement pork.
As might be expected, China’s pork imports are growing and the trend can be expected to continue, the bank said. But with ASF having spread to neighboring countries, imports are harder, and China’s ASF-induced market disruptions were expected to continue.
EXPANSION INTO OTHER COUNTRIES
As a means of dealing with the difficult import situation, some Chinese companies were trying to expand into other countries, the Pig Progress story said.
Reuters reported that China’s top feed producer, New Hope Liuhe, an agribusiness subsidiary of New Hope Group, as one such company. The firm reportedly just announced it had completed construction of its first pig farm in Vietnam’s Binh Phuoc province.
The hog facility was intended to expand New Hope’s presence in the region, the article said. New Hope Group already has eight feed companies in Vietnam, which reportedly sold more than 700,000 tonnes of feed last year.
The new hog facility is slated to have an annual production of 300,000 pigs and is to begin accepting pigs in November, the company said. Eventually, it sees an inventory of 13,500 Hypor-breed sows from Holland’s Hendrix Genetics.
In the company release, New Hope’s General Manager of New Hope’s overseas pig sector, Liu Zhong said, “for pig farming, every disease is both a challenge and an opportunity. Similar to what is happening in China, African Swine Fever disease will accelerate the consolidation of the pig farming sector.”
Indeed, US market analysts said early in the Chinese ASF outbreak that China’s hog production will be propelled into a larger, more consolidated version of itself before the disease was controlled.
It’s just too hard for a country to control a host of 10-sow herds.
CATTLE, BEEF RECAP
Cash cattle trade was reported last week at $103 to $108 per cwt on a live basis, steady to $2 lower than the previous week. Dressed-basis trade was at $170 to $173, down $2 to $5.
The USDA choice cutout Friday was down $0.42 per cwt at $231.77, while select was off $0.51 at $212.27. The choice/select spread widened to $19.50 from $19.41 with 49 loads of fabricated product sold into the spot market.
Fourteen heifer and eight steer contracts were tendered Friday for delivery against the Aug live cattle contract, along with eleven heifer and three steer retenders at 1.
The CME Feeder Cattle index for the seven days ended Thursday was $138.55 per cwt, down $0.14 from the previous day. This compares with Friday’s Sep contract settlement of $132.40, down $1.00.