China Live Hog Price Plunges on Rising Disease, Growing Supply
China's live hog price fell almost 7% on Monday from a week ago, the biggest weekly decline this year, as fresh disease outbreaks led farms to send more pigs to slaughter for an already over-supplied market, said analysts.
Prices in the world's top pork market hit 14.06 yuan ($1.92) per kilogramme, according to data from Shanghai JC Intelligence Co Ltd, the lowest since late June.
"On the one hand, this is due to concentrated selling in some areas due to the impact of swine diseases," said analysts at Huachuang Securities in a note on Sunday.
Farmers often send pigs to slaughter before the herd becomes infected by spreading disease, depressing prices.
Outbreaks of African swine fever (ASF), which can be fatal in hogs but does not infect people, devastated China's hog herd during 2018 and 2019 and has become endemic, often spiking in winter months.
Farms typically do not report outbreaks of the disease, but two industry participants said they have heard of a rise in cases. Another analyst said the disease had recently become serious.
The Ministry of Agriculture and Rural Affairs did not immediately respond to a request for comment.
Recent disease outbreaks are "continuing to ferment", Hua'an Securities said in a note, with the price of culled sows hitting a two-year low.
Chinese pig producers have barely made any profit this year, with supply significantly higher than a year ago even as demand remains tepid.
China had 42.4 million sows at the end of September, 3.4% higher than a "normal level", an agriculture official said earlier this month, and production efficiency of sows is also improving, adding to the supply.
After a brief rebound in August, hog prices began falling again in late September, despite the start of what is normally the peak consumption period over winter.
Prices may also be declining as the industry reaches a "cash flow inflection point" and speeds up a reduction of overcapacity, added the Huachuang note.
Cash flow across the industry is tight after three consecutive quarters of losses for many breeders.
($1 = 7.3178 Chinese yuan renminbi) (Reporting by Dominique Patton; Additional reporting by Beijing Newsroom, editing by Emelia Sithole-Matarise)
