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US pig prices fall as China rebuilds herds

US pig prices have fallen following China’s announcement that the country’s herd has recovered from African swine fever.

Until last week, the most active pig futures contract on the Chicago Mercantile Exchange fell by nearly 17% and prices fell to 99 cents per pound. This is the first time below $ 1 since March. Futures recorded a slight rebound on Monday, rising 3% to $ 1.03 per pound.

US prices for pork cutouts (parts of pork such as loin and ribs) have plummeted in recent weeks. Loin prices have fallen 15% in the last 10 days, while ribs have fallen more than 31%. Pork bats commonly used for pork barbecue decreased by 14%, while pork belly used to make bacon decreased by 18% in the meantime.

The Chinese government is driving the decline Reconstructed herd of pigs The 2018 African swine fever outbreak was devastating.Due to this outbreak, the national swine fever producers Select about 40% of the pig population..

The country’s Ministry of Agriculture now says that the herd of pigs has returned to more than 98% of the disease level-it was around 420 million. The recovery is much faster than planned, as China was not expected to complete this reconstruction until 2023.

US prices for pork cutouts (parts of pork such as loin and ribs) have plummeted in recent weeks.


Photo:

The Wall Street Journal Silvia Jalas

US pork producers expected to be a consistent buyer of pork exports to market while China was rebuilding its herds. “How surprised I am [of a] “The premium the US market has attached to it,” said Rich Nelson, chief strategy officer at agricultural research firm Allendale Inc.

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Imports of US pork into China are expected to decline sharply in the second half of this year, Nelson said. The US Department of Agriculture reported Thursday that China bought only 2,000 metric tons of US pork last week. This is just a small part of what China bought at this time last year.

Prices for live pigs in China have been hit by about 50% since the beginning of the year due to increased supply, but these prices have recently partially recovered.

“Price declines have reduced the amount of pork in demand, increased supply of imported and stored pork, very heavy carcass weight as producers bet on supply shortages this summer, and prices have collapsed. “The Steiner Consulting Group said in a June research note.

Some US traders remain skeptical of Chinese government data.

Craig Van Dyke, Senior Risk Manager at Top Third Ag Marketing, said:

Some analysts expect demand for US grains, such as corn and soybeans, to weaken as pig producers use less feed.

The most active corn futures on the Chicago Board of Trade have fallen nearly 26% since reaching $ 7.35 in the bushel on May 7. This is the highest level since 2013. Soybeans have fallen 20% since reaching their highest levels since May 2012.

“The news that pork prices are plummeting in China [grains] Scott Irwin, Head of Agricultural Marketing at the University of Illinois, said.

Pork sold at the Shanghai market in January. The price of live pigs in China has fallen by about 50% since the beginning of the year.


Photo:

Qilai Shen / Bloomberg News

Write to Kirk Maltais at Kirk.Maltais@wsj.com

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US pig prices fall as China rebuilds herds

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