Hog commentator Jim Long said Chinese hog producers are making supercharged profits after attending and exhibiting at the VIV-China.
VIV Qingdao 2019 held September 19-21 at the Qingdao World Expo City presented 500 exhibitors attracting more than 30,000 visits, including over 200 industry leaders. The feed to food exhibition concept conducted around 20 international seminars.
Long said the take-home message, “If you have pigs in China, prices are very good!”
• 13 lb. isowean: 1100 RMB or $150 U.S.
• 36 lb. feeder pig: 1500 RMB or $205 U.S.
• Market Hog price: 3120 RMB at 280 lbs. – $427 U.S.
• Profit per hog: 1600 RMB – $219 U.S.
“We all remember PED – we lost seven per cent of our pigs as an industry. Most had the most profitable year ever due to high prices. It’s kind of bizarre ASF for many in China is like a supercharged PED re profit,” he said. “At $200 plus per head- if you are down 50 per cent in production in China but still have 50 per cent to sell, it doesn’t take a computer or ag-economist to figure you are still making good money.”
Long said in USA-Canada producers are fortunate not to have ASF but unfortunately, are producing pigs under the cost of production. No wonder no one or next to no one is building new sow barns in the U.S. but in China many new sow barns are under construction.
“The amazing thing about China’s prices is the fact the sow inventory continues to decline. The price of pigs and market hogs probably has further upside due to the lower sow inventory compared to where it was nine months ago, which is producing today’s market hogs,” he said. “Probably in the nine months China lost another eight to10 million sows maybe? This dog has not hit the end of the chain.”
The week of Sept 17, U.S. early-weaned pigs averaged $31.13 up to $5 from the week before. Producers will probably see continued increases over the coming weeks as the market moves towards higher monthly lean future prices. The 40-pound feeder pigs averaged $39 U.S. for the same period. These prices are below break-evens for finishers.
“The small pig story, from feeder pig brokers; lack of positive psychology, profits and limited finishing space is suppressing prices,” said Long. “We expect if the market attitude and profits improved, so would space availability. We expect the finishing capacity is at maximum seasonal inventory with U.S. marketing 488,000 hogs a day (week of Sept 15). Doubt if producers are placing 488,000 a day small pigs for March marketing’s. That will increase space and then demand.” •
— By Harry Siemens