Compared with consumers’ average income, pork price is rather high in China presently, creating a barrier to pork consumption. As pork price has been on the fall recently, small hog farms have stopped adding piglets to pigsties, resulting in a piglet price decline, squeezing the profit of brood sow production.
Stimulated by last year’s high piglet price and government’s favorable policy, sow inventory has been under rapid expansion this year, reaching 8% of total pig inventory currently, but still within the normal range. But if piglet price keeps going south, brood sow farms may cut sow inventory to avoid losses.
Piglet production cost is about RMB300/head and piglet market price is RMB400/head or so currently, suggesting a profit of RMB100/head. But hog farms’ profit from hog sales is only RMB50 ~ 60/head. If hog price drops further, hog farms would be in the red. If piglet price could drop RMB40 ~ 50/head, hog growers would attain a normal profit of RMB100/head. But if piglet price moves down further, sow keepers would receive negative returns.
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