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Drop in Chinese Pig Breeding Stock

07 March 2014

CHINA - Looking at the size of the breakdown of the inventory for January, 2014, the information from the Ministry of Agriculture is difficult to obtain, but there appears to be quite a large drop in on farm inventory and a drop in breeding stock numbers, writes Ron Lane, Senior Consultant for Genesus China.

December monitoring results cannot be found. Thus this report has to look at the percentage changes in January from the previous reporting periods.

MOA states that January on farm inventory was down 4.2 per cent and breeding stock was down 0.6 per cent from the previous reporting period. (not sure if this means December or November, 2013).

As compared to November 2013-breeding stock was around 50.33 million and total on farm inventory was around 458.75 million. If one compares to November 2013, then about 19.27 million pigs in inventory changed (decreased) so that on farm inventory would be 439.48 million head.

This seems like an extreme number and it could be that the original count has been adjusted ( usually the month of January, the MOA makes an adjustment of the inventories) or other factors such as disease, cold weather and/or home consumption (mainly backyard farms) for Spring Festival, have all affected the total on farm inventory.

For January, 2013, the breakdown of the inventory for breeding stock was around 51.30 million and total on farm inventory was around 446.79 million (again from the January 2014 report from MOA, it states that on farm inventory was down 2.2 per cent from January 2013 for a total for January 2014 of 436.96 million head - as a comparison—439.48 (November 2013) versus 436.96 million head (January 2013)—either way means a large drop in on farm pig inventory reported for January 2014.

Profit margins are now showing losses. On 19 February, 2014 it was reported that the losses for a farrow to finish operation was 199 RMB/market pig ($ 32.38 US/ market pig). Compared to one month before (January 15th), it was reported that profits for a farrow to finish operation was 49.06 RMB/market pig ($ 7.98 USD/market pig). This is down by 96.01 RMB/market pig ($ 15.62 USD) from the week before-January 8th (a 66.18 per cent decrease in one week). This time last year, the estimated profit was 382.23 RMB/market pig ($62.20 USD/market pig).

Since the beginning of the year, there has been a continuous decline in profits and now large losses.

A field survey conducted by the Liaoning Provincial Price Bureau (NE China province) illustrated the huge losses that pig producers are currently experiencing. Current market pig prices have been falling and production costs have been increasing so that pig producers are losing 382 RMB/head ($ 62.16 US/market pig) for a 105 kg (231 lb.) market pig in a wean to finish system.

As calculated, a market pig now cost about 1,600 RMB ($260.36 US) per pig in the province. This includes: piglet costs 450 RMB ($73.23US); feed costs 765 RMB ($124.49US); utilities, interest and marketing costs 120 RMB ($19.53US); Vaccination costs 30 RMB ($4.88US); death loss 20 RMB ($3.25US) and labour cost 180 RMB ($29.29US).

These major costs accounts for a total of 1,565 RMB ($254.68US) per pig. Other costs would include waste management, trucking and others to round up to a total cost of about 1,600 RMB ($260.36US). The average market pig price in Liaoning during the survey was about 11.6 RMB/kg ($1.89US/kg-$86US/lb). Thus a 105 kg (231lb) market pig would earn about 1,218 RMB ($198.20US). Again, giving an average loss of about 382 RMB ($62.16US) per market pig.

What to watch for over the next few months!

Last week (20 February), the pig to grain ratio was 5.49:1. This is sharply lower than at 15 January  2014, when the pig to grain ratio was 6.18:1. This fell from 6.52:1 from the week before (8 January). At the end of October, the pig to grain price ratio was 6.59:1. One year ago on 13 January, the ratio was at 7.52:1). On the whole, in 2013 the national average of pig grain price ratio was 6.15:1 as compared to 6.25:1 in 2012 ( fell by 1.6 per cent). The chief reason was related to the pig market losses of more than five months during the spring and summer of 2013.

Recently, Alltech had their 20th Anniversary for manufacturing and operations in China. One report from them outlined the world feed milling numbers. Global feed production increased by one per cent to 963 tons, up slightly from 954 million tons in 2012.

China is at the top of the list with a total of 189 million tons of feed produced for livestock in 2013 (produced by 9,500 feed mills), the USA (2nd place) produced 169 million tons from 5,236 feed mills and 3rd place was Brazil (67 million tons and from 1,237 feed mills).

China has a declining number of feed mills as the State Government has encouraged the expansion in size to facilitate better traceability and to improve product quality. Also, the large scale farms are requiring larger consistent quality. Looking at the breakdown for species in the world: poultry was 46 per cent of total feed production (444 million tons); swine was 243 million tons; ruminants was 196 million tons; aquatic was 40 tons; pet food was 21 million tons and horses was 12 million tons.

Sixty percent (60 per cent) of the feed produced was pelleted. Asia had the highest average price of feed with $524 US/ton for finisher and from $480 to $550 for grower feed. (China Feed Industry Association has data that shows 191 million tons of feed industry output for China was produced in 2013, of which 42 per cent was swine feed-a growth of 3.2 per cent over last year.

In 2013, Shuanghui slaughtered 13.310 million pigs with a total of 1.75 million tons of meat produced. The plan for 2014 is to slaughter 17 million pigs and to produce and market 2 million tons of meat. The annual report, also shows that the company achieved an operating income of 44.95 billion RMB ($7.315 billion US)- an increase of 13.21 per cent over last year and garnered a profit of 5.148 billion RMB ( $ 837.80 million USD)-an increase of 31.62 per cent over 2012 profits.

On 19 February, the NDRC announced that plans were being put in place for the preparation to buy pigs from the market and to store in frozen pork reserves to "prevent the excessive decline in hog prices." The goal is to help to stabilize pig production and to maintain breeding stock inventories.

Genesus Global Market Report
Prices for the week of 24 February 2014
CountryDomestic price
(own currency)
US dollars
(Liveweight a lb)
USA (Iowa-Minnesota) 103.28 USD/lb carcass 76.43¢
Canada (Ontario) 189.39 CAD/kg carcass 62.03¢
Mexico (DF) 27.03 MXN/kg liveweight 92.50¢
Brazil (South Region) 3.34 BRL/kg liveweight 64.72¢
Russia 86 RUB/kg liveweight $1.08
China 11.49 RMB/kg liveweight 85.08¢
Spain 1.2 EUR/kg liveweight 74.73¢
Viet Nam 49,000 VND/kg liveweight $1.05
South Korea 4,716 KRW/kg liveweight $2.00

TheMeatSite News Desk

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