Pig Farmers in China: Fatter Pigs to Boost Soymeal Demand

Pig farmers in China are raising fatter pigs to profit from soaring pork prices, according to analysts and industry executives. Also, farmers boost demand for key feed ingredient soymeal, and reducing some of the impacts from a massive drop in the overall herd. 

Data from the Ministry of Agriculture and Rural Affairs showed that China’s pig herd shrunk by 38% in August compared last year. Also, with a year-long epidemic of African swine fever killing millions of hogs and putting farmers off rebuilding herds.

Moreover, the most common protein in pig feed – herd – is expected to push down demand for soymeal. The anticipated loss is 6% to 7% for the 2018/2019 crop before a recovery during the next crop year.

According to the estimates of Shanghai JC Intelligence, soymeal consumption will increase by 2.8% to 66.3 million tonnes in the 2019/2020 year.

To benefit from soaring pork prices, farmers are raising heftier pigs to as much as 150kg. Besides, live hog prices have risen to as much as 33 yuan per kg, and they typically slaughtered in China at around 100kg. Additionally, in some parts of the country, the price was doubled a year ago.

A purchasing manager said that the cost of raising hogs is about 10 yuan per kilo, while the pork prices are at 30 in some places. Farmers get double profits, every more meat they get. Every farmer wants to raise fatter pigs.

Furthermore, demand for soymeal is good, so crush margins are not bad at all. Also, every jin a hog puts on is an increase in soymeal.

Farmers are also increasing soymeal rations in feed to improve pigs health amid the high prices, according to an executive.

Pig Poultry and Farm Expansion

Soymeal demand is boosting after an increase in poultry production to help offset the pork shortage. Also, in the current year, estimating soymeal use in poultry feed may have risen to 20%.

Further supporting soymeal demand, a government policy measures to encourage more hog production is triggering expansion by pig farmers as well.

Moreover, on Wednesday, the agriculture ministry expected pig production capacity to hit bottom before the end of the year before stabilizing.

Managing director of Cargill’s China unit Frank Zhou said soymeal demand could jump 3% in the 2019/2020 crop year. Besides, it could increase if the disease situation and sow inventory stabilized this month.

Additionally, if sow and hog stocks keep falling, soymeal demand would decline as much as 4%.

Since August, in all provinces but three or four without giving details, hog feeds have already jumped significantly. Also, 35% of China’s pig production is expected to boost their output by 45% next year.

Additionally, one of China’s top hog producers, C.P Pokphand Co will raise from 4 million hogs currently to 6 million pigs by the end of 2021. Farms with African swine fever hogs will be restocking with the help of the firm.

On Thursday, shares in China’s major hog farmers dropped amid the rising production.