Hog-corn ratio down 14 weeks amid further feed price hikes

The key indictor for China’s hog market has continued to fall as of last week as feed companies further hiked prices due to rising raw material costs.

The hog-corn ratio edged 1.31% lower last week to 4.53:1 after having already slid in the previous 13 weeks, according to data from China’s National Development and Reform Commission (NDRC) on Monday.

The ratio has remained below 5:1 since late February this year, triggering a “level one” alert which normally leads to state interventions to support hog prices.

Hog prices in China have slumped since early December last year to 13.06 yuan/kg ($2,050/ton) last week – the lowest level since March 2019.

Prices have failed to rebound despite that the Chinese state stockpiler has begun to purchase pork from private companies within China in an attempt to lift prices.

There have been three rounds of state purchases of pork so far this year, all of which were held in March.

But the effort was overshadowed by large oversupplies of hogs in the country which continued to pressure prices lower.

Meanwhile, feed companies have started to further hike their prices because of higher raw material costs.

One of the major Chinese feed makers Haid Group announced to raise their hog feed prices by 75 yuan/ton ($12/ton) last week. Aquacultural feed prices in some areas rose by 200-400 yuan/ton ($31-63/ton).

Some feed makers have already hiked prices four times so far this year.

This trend could extend into the second quarter of 2022 as Covid disruptions on the global supply chain and oversupply of hogs in China are unlikely to resolve in the short-term.