Hog breeding margins in China surge in July amid rising prices

Margins for hog breeding in the world’s largest hog producing country surged in July this year as domestic prices for live hog reached the highest point in 15 months. 

Margins for large hog producers in China averaged 879 yuan/head ($127/head) last month, up more than four folds from the previous month, according to latest data from China’s Ministry of Agriculture and Rural Affairs. 

This was up significantly compared to the same month in 2021 when margins were at -$527 yuan/head (-$76/head). 

Moreover, profits for small backyard farmers soared 26 times higher month on month in July to hit 726 yuan/head ($105/head), a staggering contrast to a loss of 519 yuan/head ($75/head) during the same period last year. 

Margins widened in July this year as live hog prices climbed to the highest point since May 2021, averaging 22.55 yuan/kg ($3.25/kg). 

Despite higher margins last month, sales dropped as companies held back and tightened supply, hoping to lift prices higher. Total slaughtering volume during last month fell more than 12% from the previous month to hit 21.19 million heads. 

Meanwhile, sow herd in China swelled 0.5% on the month to 42.98 million heads. 

Hog prices in China have begun to retreat slightly in August after the government summoned large hog producers for a meeting to ensure stable market supply. Additionally, the government stockpiler is to start releasing national pork reserves in September in a bid to combat rising food price inflation in the country.