Pig prices are impacting production in China
From January 2021 to the end of June 2021, live pig prices in China fell by almost 65% due to increased slaughter, low consumer demand and the abundance of pork available in the market. The decline in prices is affecting production, which together with other factors, means that the demand for imported pork remains strong, according to the latest market report issued by the USDA.
Between April and June 2021, the excess production of pork in that country has lowered prices, has caused small and medium producers to liquidate the inventories of the farms and has limited the replacement of piglets. Therefore, the Chinese authorities are putting in place a system to deal with severe fluctuations in the prices of live pigs and pork in an attempt to manage prices and support farmers.
Despite this action, continued declines in live pig and pork prices will create potential gaps in pig production in the second half of 2021, leading to the conclusion that imports will remain high. Following the resurgence of African Swine Fever (ASF) in China's swine herd in late 2020, sources shared that producers showed increased concern about the spread of the disease. Hog producers reportedly rushed to sell, which drove prices down.
Restocking the farms is another issue that may have a larger impact for the industry. USDA sources indicate that breeding farms have responded by culling the least productive breeding sows, which is affecting piglet production. These trends will reduce the breeding sow population, especially among small and medium producers, while supporting large producers with high-efficiency sows.
Furthermore, feed prices in China remain relatively high, even though the Chinese industry is exploring the possibility of varying feed ingredient rations. Finally, the restocking of commercial pig farms with piglets is being delayed, according to industry sources, and is expected to lead to lower pork production in the second half of 2021.
In recent months, small and medium-sized commercial pig producers have liquidated overweight pigs (more than 250 kilograms), standard weight pigs (about 150 kilograms) and underweight pigs, as the price of meat from pig fell. Previously, producers kept pigs overweight, as consumers and meat processors found the product desirable.
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