Fatter Pigs New Farms To Boost China Soymeal Demand
NANNING, China, Sept 27 (Reuters) - China's pig farmers are raising fatter pigs to profit from soaring pork prices, boosting demand for key feed ingredient soymeal, and reducing some of the impact from a huge drop in the overall herd, said analysts and industry executives on Thursday.
China's pig herd shrunk by 38% in August compared with a year earlier, according to data from the Ministry of Agriculture and Rural Affairs, tour du lịch nam ninh with a year-long epidemic of African swine fever killing millions of pigs and putting farmers off rebuilding herds.
The herd loss is expected to push down demand for soymeal, the most common protein in pig feed, tour du lịch nam ninh by 6% to 7% for the 2018/19 crop, said Li Qiang, chief analyst at Shanghai JC Intelligence Co Ltd, before a recovery during the next crop year.
Soymeal consumption will increase by 2.8% to 66.3 million tonnes in the 2019/20 year, according to the closely watched estimates of Shanghai JC Intelligence.
That's partly because farmers are raising heftier pigs, to as much as 150 kg (330 pounds), to benefit from soaring pork prices, Li said.
Hogs are typically slaughtered in China at around 100 kg, but live hog prices have risen to as much as 33 yuan per kg ($2.10 per pound) - a record - in some parts of the country, more than double prices of a year ago.
"For us, the cost of raising pigs is about 10 yuan per kilo, while the pork prices are at 30 in some places. Every kilo more meat you get means double profits. Everyone wants to raise fatter pigs," said a purchasing manager at one of China's top pig farmers.
An executive at a major feed producer said the fatter pigs were also helping to boost crush margins.
"Crush margins are not bad at all recently as demand for soymeal is quite good," he said.
"Every jin (0.5 kg) a pig puts on is an increase in soymeal demand."
The feed executive said farmers are also increasing soymeal rations in feed to improve pig health amid the high prices.
POULTRY & FARM EXPANSION
An increase in poultry production to help offset the pork shortage is boosting soymeal demand, tour du lịch nam ninh too, the executive said, estimating soymeal use in poultry feed may have risen up to 20% in the current year.
And a flood of government policy measures to encourage more hog production is triggering expansion by pig farmers as well, further supporting soymeal demand.
The agriculture ministry said on Wednesday it expected pig production capacity to hit bottom before the end of the year before stabilising.
Frank Zhou, managing director of grains and oilseeds trading at Cargill's China unit, said soymeal demand could jump 3% in the 2019/20 crop year - October 2019 to September 2020 - if the disease situation and sow inventory stabilised this month.
But Zhou cautioned that if sow and hog stocks keep falling, soymeal demand would decline as much as 4%.
Pig feed sales have already jumped significantly since August in all provinces but three or four, said Li, without giving details.
Listed hog companies, which account for 35% of China's pig production, are expected to boost their output by 45% next year, Li estimated.
Pokphand Co, one of China's top pig producers, will raise output from 4 million pigs currently to 6 million pigs by the end of 2021, its chief executive told Reuters last week. The firm is also restocking farms previously infected with African swine fever.
Shares in China's major hog farmers slumped on Thursday amid the rising production.
($1 = 7.1312 yuan)
(Reporting by Hallie Gu and Dominique Patton; Editing by Tom Hogue)