Lyle Jones, China Sales Manager
As of August 5, 2024, China slaughter pig prices have soared to a new high of 20.66 yuan/kg ($1.31/lb.), up from its low for the year of 11.98 yuan/kg ($0.76/lb.) back on March 18, 2024. In Guangdong province in southern China, slaughter pigs can be sold for as high as 22.6 yuan/kg ($1.44/lb.) liveweight.
This is good news for China pig farmers and pork producers after 22 months of low markets coupled with high feed and labor costs. Producers are once again making money with profits estimated to range as high as $100-$115 per head depending upon slaughter weights and costs of production.
There is no doubt a shortage of pig supply is the central reason for the rising pig prices, which is a simple illustration of supply and demand. Industry insiders expect that pig prices will continue to rise through the end of the year and even surpass the highs of 2022.
How high will the pig price be and how long this cycle of profitability will last? There is still a good amount of caution by many producers after the long downturn in prices and huge losses incurred over the last couple of years. It will take more than just a few months profitable prices to recoup those losses.
We continue receiving reports of empty barns and less than designed capacity of swine farms in China. Not surprisingly, many small older poorly designed facilities have been abandoned. Medium sized farms are often only running 40-50 % of capacity. Newer and larger farms constructed after 2021 with biosecurity in mind are most likely to still be in operation with capacities as high as 80%.
Producers with access to capital have some space available to increase production if they have confidence in the market and pig prices remain high. At the same time, the Ministry of Agriculture, provincial and local governments are trying to manage production capacity with sow inventory targets and controls. It remains to be seen how effective this measure will be.
The best long-term solution to sustain profitable pig prices is for the industry to be focused upon improving Meat Quality and increasing consumer demand. Most Genetic companies’ R & D is upon carcass quality (i.e., Lean %), but they are missing the mark and have overshot resulting in a product that is pale, dry and without taste. China has not realized an increase in consumer demand in the marketplace outside of national holiday and festival seasons.
Genesus has invested more than 20 years of intensive research upon developing what we believe is the right pig for China (and globally). A strong robust pig that is easy to raise, faster growing, with the marbling bred into the meat resulting in Tastier Pork that consumers demand. Doesn’t it make more sense to produce a product that will drive consumer demand upward pulling prices along with it?
If you share the same vision, we invite you to join us at GPGS 2024 (Global Pig Genetic Summit) to be held September 10-12, 2024, at the Intercontinental Hotel Hefei. Jim Long CEO Genesus will deliver his Global Market perspective. Also, Genesus Director of Marketing Spencer Long will present “It’s all about Pork”.
