A surge in African Swine Fever (ASF) infections in China is set to reduce hog output later this year, farm managers and analysts said recently, pushing up prices in the world's top pork consumer as demand recovers.
The incurable disease has plagued China for years, with an initial wave during 2018 and 2019 killing millions of pigs and leading to a dramatic decline in meat output that roiled global markets. Chinese farms have significantly improved hygiene and procedures since then to reduce the impact of the virus, but it still circulates constantly, often spiking in winter.
Infections this year began to surge relatively late in the season, around the Lunar New Year holiday in January, when millions of people travelled after China had relaxed its COVID curbs, according to three managers at pig farming companies and analysts.
"Data from swine fever virus testing companies show that the number of positive detections exploded after the new year holiday. The order of magnitude in a single month has reached the level of the whole year of 2022," said analysts at Huachuang Securities. They estimate that the current swine fever infection area in northern production areas may be reaching 50%.
Northern provinces such as Shandong and Hebei are among the top producers of hogs. A senior manager at one of the country's top hog producers agreed with the estimate. "We do see quite a lot of new infections in March. We feel it hasn't ended yet, that's the problem," he said, declining to be identified due to the sensitivity of disease outbreaks in China.
Chinese farms typically do not report disease outbreaks to the government, making it challenging to get an accurate picture of the extent of the infections.
Chinese hog prices have hovered around 15 yuan ($2.18) – ($1U.S. = 6.8940 Chinese yuan renminbi) per kilogram since late last year, pressured by weak demand and excess supply. Large losses last year encouraged many farmers to downsize herds in the winter, which has pushed up slaughter volumes.
Infected pigs sent to slaughter could also be weighing on the price, said Jim Long, Chief Executive of Canadian genetics company Genesus, which sells breeding pigs in China. "We continue to believe the low China hog price is due to many pigs going to slaughter at any weight due to ASF outbreaks," he wrote in a recent report.
The disease outbreaks, as well as the prior herd reductions, will lead to fewer hogs reaching the market when demand improves in the second half of the year, according to the Huachuang report. Though not as serious as in 2019, the disease could reduce production by more than 10%, Huachuang analyst Xiao Lin told Reuters.
"It is serious in some provinces but not across the entire country," said Pan Chenjun, Senior Analyst at Rabobank, who estimated "around 10%" of production could be impacted.
EDITOR’S TAKE:
This is not good news for Chinese pork producers or consumers in that country. Demand is expected to rise in the second half of this year at the same time supplies will be declining, thus, leading to higher prices at the meat market. The good news is, this will likely expand exports of U.S. pork to China and boost incomes for our pork producers. That means these producers will have more disposable income and will be looking for new trucks and other equipment to help reduce their tax burden and make their operations more efficient. If you have hog farms in your area, be sure to let them know about your inventory on AgTruckTrader.com (AgTT). AgTT is the only website to specifically target farmers and ranchers. And, unlike most websites, there is no additional cost to CAD members! It is advantageous to get your inventory loaded now.
