African Swine Fever In China May Push Pork Prices Up 78% By 2020.
Pork prices in China will skyrocket more than 70 percent in the coming year as the stock of domesticated pigs known as hog will plunge to "historically low" levels because of raging African swine fever. China is the world's largest producer of pork.
According to Japanese bank Nomura, (https://www.cnbc.com/2019/04/18/with-swine-fever-in-china-prices-of-pork-and-other-meat-could-surge.html) pork prices in China could rise to a whopping 33 yuan ($4.90) per kilogram in January 2020 from the current 18.5 yuan-per-kilogram prices since February.
Already pork prices are up 40 percent since May 2018, said Nomura's report. In the past also, China had such swine upheavals, or "hog cycles. But the prices were still manageable. However, this time, it might be too high.
Heavy hog herd loss in the first quarter
According to a senior Chinese official, the outbreak of African swine fever damaged huge volumes of China's hog herd population at least 10 percent in the first quarter.
China's pork production in the first (https://www.reuters.com/article/us-china-economy-output-pork/china-warns-of-soaring-pork-prices-as-virus-curbs-output-idUSKCN1RT0A5) three months of 2019 fell 5 percent and higher declines are expected in the upcoming quarters.
"Second quarter production will see a marked drop from the first quarter, and the third quarter could be even bigger," noted Feng Yonghui, chief analyst at industry website Soozhu.com.
Informal estimates suggest that this year, 200 million pigs would have to be culled to avoid infection, according to Rabobank which forecast pork production would fall 30 percent.
However, other analysts do not expect such a massive impact. It is expected that production levels would get back to normal by 2021.
Other reasons for the shortage are pig farmers turning reluctant to increase hog stock fearing swine fever despite the lure of higher prices.
That will make the hog cycle to enlarge and last longer pushing pork prices higher than other hog cycles, the bank said.
Although the disease is deadly to pigs, it is not very scary to humans. The disease has already spread to Southeast Asia and parts of Europe and will dent global supply, according to experts.
One more factor impeding the hog stock growth will be rising feeding costs that are exceeding the price of hogs, making the business of hog rearing unprofitable.
The problem is compounded by the China-U.S trade war that made prices of soybeans costly and pushed up prices of animal feed.
U.S. hog prices to increase
China's declining hog stock will also hit global supply and push up U.S. hog prices, according to Mavis Hui, senior research director at DBS Bank in Hong Kong.
The analyst said China's hog prices are currently trading 11 percent above U.S. lean hog futures. At the Chicago Mercantile Exchange, June lean hog futures contract is 70 percent high since March 1 indicating higher prices and tight supply.
|Printer friendly Cite/link Email Feedback|
|Publication:||International Business Times - US ed.|
|Date:||Apr 19, 2019|
|Previous Article:||Jason Momoa Shaves His Beard.|
|Next Article:||Is Ryan Alive On 'General Hospital'?|