Obese Pigs in China Are Fueling Relentless Pork Price Slump

(Bloomberg) — Obese pigs in China are being blamed for worsening a sudden rout in the nation’s pork costs.

Farmers have been fattening hogs since late final yr to nearly double their regular weight — roughly the dimensions of a pygmy hippo or a feminine polar bear — in the hope the animals will generate greater returns ought to costs rebound.

Cao Tao, a pig dealer in the northwestern province of Shaanxi, mentioned lots of the swine he’s shopping for weigh greater than 200 kilograms, in contrast with their traditional measurement of round 125 kilograms. “Some farmers are holding onto their larger pigs on hopes of a price rebound,” he mentioned.

Instead, Chinese wholesale pork costs have plunged greater than 40% since mid-January amid sluggish demand, elevated imports and panic promoting by farmers after recent outbreaks of African swine fever. Muyuan Foods Co., the nation’s largest pig breeder, mentioned this week it’s anticipating a continued drop in home hog costs, with the stoop not bottoming out till subsequent yr and even 2023.

Many farmers had fattened their pigs in anticipation of a restoration in pork costs, however the rout since February has triggered a sell-off of those giant animals that could be delaying a rebound in costs, in response to Lin Guofa, a senior analyst at consultancy Bric Agriculture Group.

“When these farms sell together, the sell-off causes an explosive price slump,” he mentioned. Farms in the southwest and south are nonetheless holding numerous “cow-sized” pigs, which may very well be offered because the climate warms and push down costs for some time but, Lin mentioned.

China’s hog herd was devastated by African swine fever in 2018 and, whereas numbers have recovered since then, a latest resurgence has pushed up pork imports. The agriculture ministry mentioned in April that the nation’s pig herd could get well to traditional ranges by June or July, though the variety of hogs out there for slaughter could take one other 4 months to get again to regular.

“Super-sized” pigs are partially responsible for the drop in pork costs, Qiu Huaji, the top of swine infectious ailments at Harbin Veterinary Research Institute, mentioned at a convention final week. A value rebound had been anticipated in the third quarter as a result of resurgence of African swine fever chopping herds by nearly half in some areas, he mentioned.

Shares of Chinese hog producers tumbled because the rout unfolded. Muyuan has misplaced nearly 30% in Shenzhen since hitting a record-high in February. Jiangxi Zhengbang Technology Co., the nation’s second-biggest breeder, has retreated 23% this yr, whereas New Hope Liuhe Co. has declined 32%.

The influence of the overweight hogs on pork costs can be being difficult by new guidelines that prohibit the transport of stay pigs throughout the boundaries of 5 areas. The laws — aimed toward combating the unfold of African swine fever – are reshaping the market and resulting in regional value variations.

Qian Xiaoyun, a farmer in the northern metropolis of Tianjin, mentioned her household wouldn’t be breeding bigger pigs after the worth stoop and had offered all of their animals that weighed greater than 150 kilograms. “The falling pork prices and high corn prices give poor returns on those larger hogs as they eat more,” she mentioned.

(Updates with shares of hog producers in ninth paragraph)

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