China's largest pig farmer, the New Hope Group, expects the country's pig population to have largely recovered from the pre-African swine fever (ASF) outbreak by 2021. Then the prices would drop again, because investors from outside the industry were involved in the Chinese pig market.
The ASF virus, which is always fatal to pigs, has halved the population of the huge Chinese pig herds last year. Many government support measures then ensured that the farmers raised pigs again. The prices of the most popular meat in China will remain relatively high; however, this could change with a larger domestic production and then fall below the production costs. New investors from the IT sector or real estate investments, who have now invested their money in the agricultural sector, are also involved.
These investors have a lot of money and usually invest very large sums. In this way, they contribute to the rapid further development and restructuring of the Chinese pig market. But that would also contribute to overproduction.
Established pig producers have also reacted and are expanding rapidly. New Hope sold 3.6 million pigs in 2019 and plans to have 15 million pigs per year in 2021 and as many as 25 million pigs in 2022. The group will slaughter 8 million pigs this year. The production cost is 11 yuan / kg. The prices of pork have been falling steadily since February and will probably continue to fall until the end of the year because production is increasing and further imports are being brought into the country.
In November 2019 and February 2020, when the COVID-19 pandemic in China peaked, pork prices in the Chinese supermarket rose to almost 60 yuan. Since then, however, prices have dropped by 30%. Last week they were below 30 yuan / kg, as low as in October 2019.
Weak consumer demand is now pushing prices down as schools and canteens remain closed.
Source
Hansa Terminhandel GmbH
