Bearish hog price to linger in coming weeks

The live hog price in China is expected to remain in a downward trajectory as selling pressure piled up amid an oversupplied outlook, the Chinese state planner said.

At the end of last week, live hog prices in China slipped 0.75% week on week to 18.61 yuan/kg (US $2,922/ton), data from China’s National Development and Reform Commission (NDRC) showed.

Selling activities from large hog producers in China were said to have triggered more sales from smaller producers, exerting pressure on price. Hence, the NDRC estimates pork price has “high probability” of edging further lower.

Meanwhile, corn price also fell about 70 yuan per ton last week to 2760 yuan/ton (US $433/ton). Corn is a major ingredient in animal feed in China, representing more than 60% of the country’s total corn consumption each year.

As noted in our previous analysis, hog and pork prices in China face a situation of long-term oversupply. Hog futures on Dalian Commodity Exchange has nearly halved since it began trading in January this year, and cash pork prices in the country are also hovering near six-month lows.