With obscene profits to be made, China’s swine farmers are scrambling to buy scarce piglets, driving their prices to crazy-high levels. Soaring piglet prices are the most obvious indicator of a ballooning cost structure that is likely to lock in ever-higher Chinese meat prices for the future.
While live hog prices have come down slightly in early March, the price of piglets is still rising. Wens Company, China’s largest swine producer, announced it will award managers a cash bounty for every piglet they buy through the end of 2020.
Crazy-high piglet prices are driven by a simple equation of tight supplies, fat profits from finished hogs, and companies eager to grab market share as the industry rebuilds after the 2018-19 African swine fever epidemic. Many farms sold most of their herd during the spring festival holiday. Restocking of farms has been delayed by the shortage of pigs and by disruptions of commerce and transport during the novel coronavirus epidemic. Disruptions are easing, but piglets are still scarce.
The Chinese swine industry–egged on by government officials desperate to maintain pork supplies–has taken shortcuts that will likely prolong the recovery and lock in low productivity and high prices for the long run. One commentator notes that the four-month increase in sow numbers reported by the Ministry of Agriculture last month was achieved by farms holding back female swine that had been intended for finishing barns to breed them as piglet-producing sows. One commentary estimated that 40 percent of piglets are being produced from these converted sows.
The drying-up of live pig imports over the last two years is another indicator of Chinese herd neglect. Chinese breeders normally bring in a small but steady stream of purebred animals purchased from breeders in North America and Europe to renew the nucleus herd of Durocs, Yorkshires, and Landrace pigs. These animals are bred and multiplied to become highly-productive commercial sows. Surges of pig imports have occurred after previous epidemics of PRRS and PEDv, but customs statistics indicate China’s imports of live swine during 2019 were just $3 million, the lowest value in 15 years. Monthly data show that imports of live swine stopped after September 2018–except for a single shipment of Danish pigs in August 2019. The timing corresponds to the onset of ASF and trade tensions with the United States and Canada–the two main suppliers of China’s live pigs in 2017 and 2018.Read full article Share on twitter