Pork producers in China in a hurry as prices continue to decline
China has the largest hog herd globally, accounting for about 50% of the global pig population. Pork (Pig meat) is also the most favored and most consumed type of meat in the Chinese diet. The domestic per capita consumption exceeds 30 kilograms on average, and it is expected to increase more in the future. The country is the largest pork producer; however, since 2019, output has been severely affected by the African Swine Fever (ASF) outbreak. The first outbreak was recorded in the mid-2018 post, in which cases kept increasing. Even though the number of ASF cases reduced, a resurgence at the end of 2020 increased concern among producers that the outbreak will spread at a wider scale.
Source: Statista.
With a resurgence in ASF cases, the panicked pork producers rushed to sell their produce. The breeding farms started culling less productive breeds, which affected the overall piglet production in the country. Furthermore, restocking commercial hog farms with piglets is being delayed, and it is expected to result in lower pork production in the second half of 2021 compared to the previous years. There was an increase in slaughtering and a low consumer demand, resulting in abundant pork availability in the market. The oversupply of pork resulted in crashing pork prices across the country.
From January to the end of June 2021, the price of live hogs fell by nearly 65%, following which the price of piglets also fell. The small- and medium-sized commercial hog producers focused on liquidating their overweight hogs (over 250 kilograms), standard-weight hogs (around 150 kilograms), and under-weight hogs as the price for pork dropped in the market. However, the large-scale producers managed to take on short-term losses, which allowed them to maintain production targets. As a result, the price of pork meat in the wholesale market of China fell by 71.25%, from USD 7.27 per kg to USD 2.09 per kg over six months.
Source: Tridge
On June 21, 2021, the price warning system entered the “second-level” warning for excessive price declines in pork meat prices. It was expected that the government authorities would purchase pork from the market to store and auction to manage price volatility. Chinese producers are used to keeping overweight hogs as consumers and meat processors found the product desirable, but the recent outbreak of ASF has changed the dynamics of demand and supply of pork in the market.