China’s most-active hog futures DLHcv1 closed down 4% on Monday, the biggest decline in six weeks, as excess supply offset any boost to consumption from last week’s holiday.
Hog prices in the world’s top pork market normally rise ahead of holidays but instead fell ahead of the week-long holiday that started on Sept. 29.
Cash hog prices dropped from 16.48 yuan per kilogramme on Sept. 24 to 15.66 yuan on Oct. 8, said analysts at Huachuang Securities in a note.
The November futures contract on the Dalian Commodity Exchange closed at 15,945 yuan ($2,185.68) per metric ton, the lowest since July 21.
The falling prices are due to both rising supply and weak demand. From February to July the number of newborn piglets increased by 8.4% year-on-year, but consumption is weak due to the slow economic recovery, the Huachuang analysts said.
Despite the traditional peak demand period in the second half of the year, it would be difficult for prices to recover significantly, they added.
Share prices at the country’s biggest hog producers also plunged, with Muyuan Foods002714.SZ down 7.6% to 35 yuan a share at Monday’s market close, the lowest since January 2020.
New Hope Liuhe 000876.SZ shares fell as much as 4.9% to 10.46 yuan, their lowest since February 2019, though later recovered to 10.7 yuan.
The company said on Monday its September hog sales fell by 23.6% year on year to 2.3 billion yuan.
The Shanghai Stock Exchange said on Monday it had terminated its review of an IPO application by major pig producer Chia Tai Investment Co Ltd, after the company withdrew its application.
Chia Tai Investment was spun off in 2021 from C.P. Pokphand Co Ltd, a subsidiary of Thailand’s Charoen Pokphand Foods (CPF)CPF.BK.
It had aimed to raise 15 billion yuan but dropped the plan due to underperformance “caused by lower than anticipated swine prices in China”, CPF said in a statement.
($1 = 7.2952 Chinese yuan renminbi)
(Reporting by Dominique Patton; Editing by Jacqueline Wong, Nivedita Bhattacharjee and Susan Fenton)
