China hit with oversupply of hogs as farmers slow to reduce herds

An oversupply of hogs in China may continue because some farmers in the biggest pork producing nation have been slow to reduce their herds, said a Beijing-based researcher.

The industry will probably remain unprofitable this year as the price of piglets hasn’t fallen in tandem with mature hogs, encouraging farmers to hold breeding sows, Feng Yonghui, general manager of Soozhu.com, said in an interview yesterday.

Piglet prices in China have been little changed since February while pigs have dropped about 9%, according to Shanghai JC Intelligence Co, another agriculture research firm.

Soybeans, used in hog feed, extended declines in Chicago yesterday after slumping the most in a week on March 21 on concern that import demand from China is slowing.

“The hog farming industry will have to brace for another hit because sow and piglet inventories are still high,” Feng said. “If everyone hopes he can catch the rebound and keeps his sows, then the glut will only get worse.”

Hog prices in China averaged 10.92 yuan (€1.27) per kilogramme on March 21, 14% less than a year ago, according to a report on Soozhu.com. Raising and selling one hog incurs about 313 yuan in losses, the report says.

Soybeans are crushed to make meal, fed to animals as a protein ingredient, and the oil is used in cooking. When hog prices are low, farmers look for substitutes including corn, which have less protein and slow the animals’ growth, Feng said.

China delayed or resold about 2m tonnes of shipments this year after bird flu and declining hog prices cut demand for animal feed, Shandong Sunrise Grain and Oil Trading said on March 18.