BEIJING: Chinese pig prices hit their lowest in nearly four years this week, plunging farmers in the world’s top pork market into the red and underscoring concerns that a rapid expansion of large pig farms in China has outpaced slowing demand growth.
The sudden downturn – one of the steepest declines over such a short period ever – will mark the first serious test for many companies that have rushed into pig farming in the last two years.
It will also slow imports of pork by the world’s top buyer, traders and analysts say. The price is set to recover when demand picks up later in the year but will come under renewed pressure in 2019 as more new farms start production, analysts say.
“The reason is very clear. There are a lot of pigs on the market,” said Feng Yonghui, chief researcher at trade website Soozhu.com.
The sudden plunge in prices is the result of conflicting trends in the industry over the last year. On the one hand, big producers have expanded rapidly to grow market share, but on the other, a government crackdown on pollution that intensified in 2017 shut many small farms, making it difficult to get an accurate picture of supply.
“Slaughterhouses took advantage of the increased supply to set prices, which led to growing price pressure in the market,” said Feng.
Prices in February in seven major provinces fell at their fastest pace on Reuters records going back to 2012.