New Hope, the third largest publicly listed hog producer, said its cost of production has risen due to outbreaks of African Swine Fever over the winter.
The company said its current cost of production is 17 yuan per KG, compared to the 16.5 yuan per KG it reported in early December 2022.
Based on the company’s financial data in January, its average selling price was 14.73 yuan per KG and implied hog weights were 107 kilograms. This would put average losses during the month at 243 yuan per head for one of the largest hog producers.
National average hog prices have continued to be weak, now down to 15.26 yuan per KG. Except for the first 3 days of 2023, national average cash prices have not been above 16 yuan per KG this year. Unless cash prices move up in the next three weeks, the company would be looking at an entire quarter where losses per head were between 100 and 300 yuan.
Even with these low prices, many companies are still expanding.
The opening of the largest hog farm in Guangzhou was announced this week. The facility has an expected annual output of 360k head, covers 87 hectares, and has four nine-story breeding facilities.
The farm said it will be importing French breeding stock and it will be around a year before the facility produces fattened hogs.
The project’s organizers are planning a second phase of construction to bring this up to 500k head per year.
The project is run by Yuexie Group, a state-owned enterprise in Guangzhou that has only three years of experience in the hog industry. The group says it plans to add more than 2 million head per year in production capacity around the Guangdong area.