"the price of chinese pork fell, the global market for raw pigs panics!" german media reported on 23 days that chinese pork prices were going through a cliff drop, prompting sustained attention from large european and american exporters. The fall in the price of chinese pork also exposes the soybean and maize feed industries to downward trends. However, according to several experts to globe times journalists, the market demand has increased in the second half of the year and the price of pork or the rebound will ease the industry's plight。
Pig farming: the price of meat has to fall
According to data monitored by china's raw pig alert network, on 23 june the national average price of skinny pork was $13. 01/kg, down by $21. 13/kg from $34. 14/kg in the same period last year, down by 61. 89 per cent. Mr. Kang, the manager of the hantang pastor, based in hebei-paling, told the globe times journalist that the price of pork had fallen slowly since the beginning of the year, accelerating in march and late in may. The price fell quickly, making mr. Kang a bit of a surprise. “the price fell somewhat unexpectedly in march, and by may it fell,” mr. Kang told reporters that the hanton pastoral industry is a medium-sized pig farm with 15,000 heads of female pig storage, at a cost of about $15 per kilogram。
Not only is a medium-sized pig-farming enterprise such as the han-tang pastoral industries losing money, but it is also paying back the stock share of the leading domestic pig-farming company, whose annual newspaper discloses a cost of $16 per kilogram. The workers of a large domestic pig farming enterprise told globe times reporters that, at the current price of us$ 12-13 per kilogram, the entire industry was in deep loss, and that more domestic pig-producing enterprises cost more than their pastoralist shares. The situation is even worse for those who buy pig seedlings for second-generation fattening than for those who raise their own pigs, since the price of a pig seedling was more than $1,000 before, almost the same as the current exit price。
In interviews, it was widely felt in industry that the price of raw pigs would continue to decline. Mr. Kang expects that the rate will drop by approximately $12/kg in the future. In domestic companies, with the exception of pastoralist shares, the profits of other pig farming enterprises have been significantly reduced or even lost。
Imported pork prices fell in the second half of the year
Oversupply in the market is the most important reason for the continuing decline in pig prices. In a statement issued in late 2019, the chinese livestock association explained three reasons: first, the continued recovery of chinese raw pig production capacity and increased supply; second, the weakening of market demand and reduced consumption of pork, owing to a number of factors; and, second, the fact that a number of farmers joined the second fertilizer army, which, when the price of pork fell in april, carried out a “stamp-down sale”, which led to a sharp fall in prices。
Mr. Kang told journalists that the positive performance of the past two years had led to the expansion of productive capacity in the farming industry and that the impact of the african swine plague was rapidly declining. Moreover, because of the high price of pork, the state has increased the volume of imports of pork, making it available in sufficient quantities。
But the fall in chinese meat prices has also caused panic in eu countries exporting chinese pork. “the impact of the fall in chinese prices can be felt globally,” tunnes, germany's largest meat-processing firm. According to the german “agriculture today” website, china is the largest third-party destination for pork exports from the european union, and exports of chinese pork from spain, denmark and germany remain strong. According to data released by the european commission in early june, during the first quarter of this year european union member states recorded a record high in pork exports, selling 1. 6 million tons of pork to third countries, an increase of 30. 1 per cent over the same period last year. Among them, the delivery of european union pork to china increased by 26. 2 per cent。
The sharp fall in the price of chinese raw pigs has put enormous pressure on prices in many countries. The price of pork slaughter in germany this week has dropped from 1. 57 euros per kilogram last week to 1. 48 euros, and has fallen several times in the recent past. Spain, denmark and others are concerned that, as domestic pork prices fall in china, there will also be a marked fall in the price of pork for eu exports, which will also lead to a fall in the price of pork within the eu, affecting profits. According to industry sources, the european pork market is dependent on china and the downward trend in prices is likely to be evident in the second half of the year. In addition, there has been a downward trend in the soybean and maize feed industries along the production chain of raw pigs, which has a significant impact on soy-exporting countries such as brazil, argentina and the united states。
When's that coming back
If the price of pork continues to decline, what will the industry face? “small and medium-sized farming enterprises may not last two or three months in normal years. However, the better performance over the past year or two has brought considerable cash reserves to these enterprises. I believe that these farming enterprises can last for more than half a year, and that if the situation does not improve, they may have to consider transformation.” mr. Kang told the press that, in extreme cases, the whole industry would wash cards。
The institute of agricultural economics and development of the chinese academy of agricultural sciences’s deputy researcher wang zu li told reporters in the globe times that, based on previous years’ experience, a pig cycle of four years is now in the middle of the price decline of the current cycle. “i feel that the price of pork may rebound in the second half of the year, but the response is optimistic, and that the whole industry will need to have a more objective judgement in the coming year.”。
Wang zouli argued that after the sharp fall in chinese pork prices, domestic pork prices had become more advantageous than foreign imports, which would reduce the incentive for importers to import pork from spain, germany, denmark and the united states and brazil. In addition, wang zouli believes that the state should, in due course, carry out pork collections in order to balance supply and demand in the market, at least to improve the current state of decline in the farming environment in terms of confidence and market sentiment。
The low price of pork remains unpredictable at present, and mr. Kang believes that the price of raw pork may rebound around mid-autumn this year. However, according to wang zouli, the current state of the bottom is not too “out of reach” compared to the historical cycle of pigs. According to feng yonghui, the chief analyst of the chinese pig alert network, the price of pork is expected to remain relatively weak in the short term, but after half a month or a month, prices or current points are expected. He reminded the pig-breeding enterprises not to panic and sell, nor to overstretch, and to select the appropriate opportunities to do so。
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