CHINA, Beijing. High feed costs are a burden on pig farmers. Prices for slaughter animals are now lower than in the United States. States. The government declares the first of three warning levels.
In China, the unchecked price decline in the pig market continued in mid-June. Prices for slaughter pigs have now plummeted to such an extent that the National Development and Reform Commission last Wednesday declared the first of three warning levels. These are part of a new system of market and price stabilization that was launched in early June with various measures. In addition to more closely monitoring the market when prices are high or low, the country's strategic pork reserves play a significant role in this, and are to be increased or decreased depending on market conditions.
New indicators have also been introduced in the early warning system which, in addition to the development of stocks, show the course of prices and their relationship to each other at the various market levels. The key measure for slaughter pig production is the ratio of slaughter pig price to feed costs. For a long time, the ratio of 5.5 to 1 was considered the break-even point for Chinese pig production. However, due to increased feed costs, the ratio was raised to 7 to 1. This has now been significantly undercut for some time, which is why the first warning level has been declared.
This is likely to lead to a build-up of stocks, but could also be a further brake on Chinese pork imports. In any case, the Chinese market is currently more than well supplied by the numerous supply of ready-to-slaughter and heavy pigs, which is why producer prices slumped. Last Friday, the nationwide average price was reported at CNY 13.25 (€ 1.73) per kilogram live weight (LG). The price has fallen 22% since the beginning of the month alone, and 63.8% since the beginning of the year. Slaughter pig prices are thus below those in the US, and cost-covering production is generally no longer possible for Chinese pig producers.