Hog prices in China hit new low, but feed prices rise
Live hog prices in China continue to fall in the second half of this month reaching a new low on record despite state-backed efforts of national pork reserve restocking.
The price level slipped more than 3% in the latter half of March to 11.9 yuan/kg ($1,871/ton) compared with the previous half of the month, according to data released by China’s National Bureau of Statistics (NBS) on Thursday.
Hog prices have fallen nearly 30% since the start of 2022.
Chinese brokerage Galaxy Futures recently expected that “current large supply of hogs” and “impact of Covid on demand” will likely dampen hog prices.
Prices have continued to soften despite that Chinese state stockpiler have begun to purchase pork from private companies in a move to support falling pork prices and stabilize hog prices.
According to latest data from the Ministry of Agriculture and Rural Affairs, the national average wholesale pork price ticked 1.3% higher day on day to 18.4 yuan/kg ($2,893/ton) on Thursday.
In contrast, prices for feed ingredients gained during the same period, among which soymeal prices rose 3.4%, corn and wheat prices firmed 1%. This will likely further weaken margins for hog producers that are currently below the breakeven level.
Fertilizer shortages push prices even higher
Potash fertilizer prices in China continue to rise and are currently at the highest level in over a decade while stockpiles remain small.
Inventories are estimated at half the level of last year.
Prices remain very high with most markets trading between 300 and 500 yuan higher than the ex-factory price.
In some markets, prices have risen to 5,550 yuan per ton ($875 USD/ton) and the strongest regional prices are in northeast China, the countries corn and soybean belt.
Wheat auction prices drop but demand remains strong
Auctions of national reserve wheat remained strong on Wednesday, with 546,000 tons available in the auction and 98.4% purchased.
The average price was 2,884 yuan/ton ($455 USD/ton) which was 74 yuan/ton lower than last week.
Most of the wheat was auctioned in Henan, representing 430,000 tons of the total available volume. Average prices for wheat in Henan dropped by 62 yuan compared to last week.
This week’s auction was the 11th of the year and all auctions this year have seen nearly 100% of the wheat on offer bought by the market. Supplies in the cash remain scarce, so flour millers are relying on national reserve auctions for supplies.