China’s hog futures rose as much as 6% on Monday, after a surge in demand during the week-long National Day holiday, amid tight supply, pushed up spot prices.
The contract for live hogs for January, the most-active on the Dalian Commodity Exchange, rose by 5.8%, the biggest daily gain since hog futures were launched last year, to 23,735 yuan ($3,336.71) per tonne as of 2:42 p.m.(0642 GMT).
Cooler weather and a bump in consumption during the holiday boosted demand for fresh meat supplies, pushing up daily slaughtering volume, said Wu Li, an analyst at Tianfeng Agriculture, in a note on Sunday.
Spot prices for hogs reached 26.2 yuan per kg on Sunday, up 8% since Sept. 25, the note added. Prices are at the highest since March 2021.
Futures rallied on the sharp rise in spot prices as Dalian reopened for trading on Monday.
China’s hog production has contracted in recent months, after months of heavy losses by farmers since last year led some to reduce breeding.
Producers began increasing production again this year as prices improved but expanding supply takes months and many are cautious because of uncertain meat demand in China’s slowing economy.
China’s state planner said on Sunday it will release a new batch of pork from state reserves to try to cool prices.
The state planner has sought to reassure the market that supply is sufficient and has blamed farmers for holding back supplies. It has also blamed unofficial media reports for fuelling market concerns.
Further measures are expected, said Yuan Song, chief analyst at trading firm Juxing Agriculture Group, which could include more pork reserve sales and the authorities seeking pledges from large producers to maintain steady production.
Pig producer shares also rallied on Monday, with top producers Muyuan Foods Co Ltd and Wens Foodstuff Group Co Ltd both up 7%.
The stronger hog prices also lifted poultry companies, which had struggled with losses in the first half of this year.
Shares in chicken breeders Shandong Yisheng Livestock & Poultry Breeding, Shandong Xiantan Co Ltd and Shandong Minhe Animal Husbandry all hit the daily limit of 10%.
($1 = 7.1133 Chinese yuan renminbi)
(Reporting by Dominique Patton; Editing by Tom Hogue, Edmund Klamann and Christian Schmollinger)
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