News Pigs & Pork
Chinese pig prices uexpectedly surge
The planned shrinkage of the Chinese sow herd is causing pig prices in the Asian country to clearly trend upwards in recent weeks. This seems to shed light at the end of a long tunnel.
For the past two years, Chinese pig prices have been too low for pig farmers to make decent profits. An important reason for the persistently low pig prices was an abundant supply. This put significant pressure on the market and also resulted in high volatility. In the first few months of this year, prices fluctuated between 14.35 yuan and 15.61 yuan. Converted, this is a range of €1.83 to €1.99 per kilogram. By our standards, these are high levels, but not in China. Even in March, prices remained at a low level, although there was less volatility at that time.
Production Decline
The stabilization of the price is the result of a decrease in the Chinese pig herd. To prevent a repeat of overproduction, the Chinese government decided last March to lower the targets for the sow herd: from 41 million to 39 million sows. This is to ensure that pig farmers can produce profitably by relieving the market. The lower limit of the measure is intended to prevent pig prices from skyrocketing again, as happened a few years ago during the numerous outbreaks of African swine fever.
China is well on its way to achieving the targets. Apart from the target, the low pig prices already led to a decline in the Chinese pig herd. From October 2023 to March 2024, the number of pigs decreased by 4.9%. At present, China has reduced the size of the sow herd to just under 40 million.
Prices Starting to Rise
Since the beginning of the second quarter, pig prices have been rising again. Recent data from the Chinese market agency Soozhu shows that pig prices have increased significantly in recent weeks. This data differs slightly from government data and is generally a bit more volatile. On May 14, pigs were traded at 15.04 yuan per kilogram according to the market agency. On May 29, Soozhu reported a price of 17.61 yuan per kilogram.
Thus, the Chinese plan to boost pig prices seems to be succeeding quite quickly without having reached the target yet. The lingering question now is whether the Chinese government will also be able to stabilize pig prices at an acceptable level for them. This is because the sow herd still needs to decrease by roughly 1 million sows.
