Pig prices firm as China’s African swine fever woes deepen

Pigmeat prices look likely to rise as the huge scale of China’s African swine fever outbreak continues to unfold.

At least one million pigs have died or been slaughtered in a bid to control the disease since the Chinese outbreak began last year.

See also: A guide to African swine fever and how to minimise the risks

According to US Department of Agriculture calculations, the lost breeding potential means the total herd will fall from 433 million head in 2018 to about 374 million over the next 12 months.

Pig market pointers

  • Months of falling prices could be ending, but producers are still losing money as cost of production remains higher than market price
  • Huge African swine fever cullings and deaths in China mean its imports of pork and breeding stock must rise
  • Much supply likely to come from US, but this will create opportunities elsewhere 
  • European prices responding more dramatically to China figures, UK is slower

That would represent about 59 million head or 13% of China’s vast pig herd, but the disease is still thought to be spreading and the crisis may yet deepen.

Reports by news agency Reuters suggest farms awaiting official test results are continuing to ship breeding stock despite having already lost pigs to the highly contagious disease.

Pig industry analyst and commentator Peter Crichton said the fluid situation was making reliable figures hard to tie down and accurate forecasting difficult.

However, he suggested China’s pigmeat imports may even have to double in 2019 to supply the lost production and recover the breeding capacity.

What is more certain is that China will take many months to even begin recovering those production levels, Mr Crichton said.

“It’s not possible to ship in or produce sufficient breeding stock to recover the production capacity in the short term,” he said.

It means supply will be reduced and prices could be firmer for a long time to come, with some markets already beginning to respond.

The influential German Producer Price has reacted strongly, increasing by 7 euro cents/kg (6p) to 150 euro cents/kg (129p/kg) in the week ending 22 March.

Since then it has risen by a further 10 euro cents (8.5p)/kg this week and the price now stands at about 160 euro cents/kg (137.7p/kg), Mr Crichton reported.

However, UK prices have responded much more slowly, with AHDB figures showing the EU-spec SPP up 0.19p/kg at 137.96p/kg deadweight and the UK spec rising by the same amount to average 135.50p/kg by 23 March.

This follows many months of a weaker trend since the middle of last year, although European prices fell further than those in the UK.

That weaker trend means for the final quarter of 2018, finishers were losing about £7 a head, according to the most recent AHDB cost-of-production estimate.

Mr Crichton suggested the sluggish price rise for GB pigs was due to suppliers outside the UK fulfilling the early orders.

Despite ongoing trade difficulties between the US and China, he expected pigmeat from North America to be used to supply much of the deficit.

“But as that happens it will open up vacuums in supply elsewhere that British pigmeat can supply and the UK price will continue to firm,” he predicted.

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