The USDA’s Foreign Agricultural Service forecasted China’s 2022 hog production to decline by 5% as low prices and disease this year led to significant slaughter and delayed restocking.
The predictions came in an FAS Global Agricultural Information Network report from the Beijing office.
Pork production next year could decline by 14% as fewer hogs come to market and government policies designed to limit price fluctuations inadvertently undermine expansion. China’s pork imports could rise to 5.1 million tonnes as consumer demand exceeds production.
Cattle and beef production was forecast to grow slowly in 2022. High beef prices could encourage investments by large producers, but small producers with poor herd genetics and space constraints will continue to dominate production.
China’s cattle imports will be stable at 350,000 head, but beef imports could grow to reach 3.3 million tonnes. High beef prices could be balanced by more diverse suppliers entering the market.
HOG, PORK PRODUCTION
In 2022, China’s hog production could decline, but government policies will disincentivize small- and medium-scale operations by controlling how quickly pork prices increase. Large, well-capitalized operations will benefit from other subsidy policies.
As fewer small- and medium-scale operations remain in the market, the share of hogs produced by large operations will continue to grow.
Imports of breeding swine in 2022 will decline by 14% to 30,000 head as pork price management by China’s regulatory and planning agencies tempers expansion. However, other policies to develop China’s domestic genetics production and improve overall sow productivity will ensure that imports of live breeding swine do not decline sharply.
2022 pork production could decline as fewer hogs reach market weight compared with prior years. In 2021, the slaughter of a significant number of overweight hogs boosted pork production and dramatically lowered pork prices during the first half.
In 2022, government price controls may undermine hog and pork production. Consequently, Chinese pork exports could fall 10% to 90,000 tonnes.
Tight supplies next year could drive pork imports to 5.1 million tonnes. In 2021, significant slaughter increased pork production and frozen pork reserves, but higher consumer and institutional demand in the fall and winter months of 2021 will deplete them. For this reason, pork imports were forecast to rise in 2022 as pork supplies tighten.
CATTLE PRODUCTION
Cattle production in 2022 could increase slightly as small operations marginally increase their herd and as investments by large operations come online. However, small farms, limited grazing availability and environmental regulations could constrain production increases.
Propelled by high beef prices, cattle production could grow in well-established provinces and in new areas. Herd quality may remain an issue.
CATTLE, BEEF RECAP
The USDA reported formula and contract base prices for live FOB steers and heifers this week ranged from $122.43 to $127.40 per cwt, compared with last week’s weekly range of $127.40 to $128.11. FOB dressed steers and heifers went for $192.44 to $203.38 per cwt, versus $202.27 to $203.18.
The USDA choice cutout Wednesday was down $3.07 per cwt at $319.82, while select was down $6.73 at $283.90. The choice/select spread widened to $35.93 from $32.27 with 151 loads of fabricated product and 40 loads of trimmings and grinds sold into the spot market.
The USDA reported Wednesday that basis bids for corn from livestock feeding operations in the Southern Plains were up $0.10 at $1.85 to $2.05 a bushel over the Dec futures and for southwest Kansas were unchanged at $0.40 over Dec, which settled at $5.33 1/2 a bushel, up $0.13 1/4.
The CME Feeder Cattle Index for the seven days ended Tuesday was $154.20 per cwt down $0.19. This compares with Wednesday’s Sep contract settlement of $154.72 per cwt, down $0.55.