China Hog Industry News

[Mustang Sally Farm]

Chinese Food Firms Look to S Korea to Improve Image
17 December 2013

SOUTH KOREA - South Korea is seen as a springboard for companies to explore the international market and win consumers' confidence on safety issues, reports Lyu Chang in Seoul.

For a number of years, the media has been riddled with reports of the poor quality of some Chinese food and beverages, ranging from infant milk formulas and pork contaminated by cancer-causing toxins or the use of excessive amounts of additives to water drawn from rivers containing hundreds of dead pigs.

But a collection of food companies in the world's largest exporter plans to change that perception and prove that it can match quality with quantity by qualifying for the coveted "Made in Korea" label.

[Mustang Sally Farm]

Transgenic Pigs Born of Chinese Research
30 December 2013

CHINA - Researchers at South China Agricultural University have published their research that produced 10 transgenic pigs, which glow green in the dark.

Along with red, green is the colour of this holiday season. And bright green is showing up in more than just decorations.

In Guangdong Province in Southern China, 10 transgenic piglets have been born this year, six of them since August, and under a black light, they glow a greenish tint, reports the University of Hawai'i Manoa (UH) [Image right from South China Agricultural University].

A technique developed by reproductive scientists from the UH John A. Burns School of Medicine was used to quadruple the success rate at which plasmids carrying a fluorescent protein from jellyfish DNA were transferred into the embryo of the pig.

Drs Zhenfang Wu and Zicong Li of the South China Agricultural University have detailed the research that produced the transgenic pigs in an academic manuscript recently submitted to the journal, Biology of Reproduction. Dr Zicong is a UH alumnus. Also assisting in the manuscript was Dr. Johann Urschitz, an Assistant Research Professor in the UH medical school’s Institute for Biogenesis Research (IBR).

In a video accompanying the research, the pigs - not unlike human children afraid of the dark - begin to squeal when the lights are turned off, except for the black light, which helps illuminate the green tint. The noise is because the scientists are holding the by-now-large piglets in a container to prevent their movement, to make the florescent glow most visible.

The green colour simply indicates that the fluorescent genetic material injected into the pig embryos has been incorporated into the animal’s natural make-up.

“It’s just a marker to show that we can take a gene that was not originally present in the animal and now exists in it,” explained Dr Stefan Moisyadi, a veteran bioscientist with the IBR.

Dr Moisyadi said the animals are not affected by the fluorescent protein and will have the same life-span as other pigs. “The green is only a marker to show that it’s working easily,” he said.

The ultimate goal is to introduce beneficial genes into larger animals to create less costly and more efficient medicines. "[For] patients who suffer from hemophilia and they need the blood-clotting enzymes in their blood, we can make those enzymes a lot cheaper in animals rather than a factory that will cost millions of dollars to build," Dr Moisyadi said.

The IBR technique involves proprietary pmgenie-3 plasmids conferring active integration during cytoplasmic injection. This technique was also used to produce the world’s first “glowing green rabbits” in Turkey earlier this year. Turkey is expected to announce results of similar research involving sheep in the New Year.

The Institute for Biogenesis Research at the John A. Burns School of Medicine is the home of high-level reproductive research. It is located within the medical school's department of Anatomy, Biochemistry and Physiology. Its goals include continuing to improve human in-vitro fertilisation techniques. Its Director is Dr W. Steven Ward.

[Mustang Sally Farm]

Chinese Pork Price Drops Slightly
07 January 2014

CHINA - The price of foodstuffs in China was steady during the last week of December, according to a survey of 36 medium and large cities carried out by the Ministry of Commerce.

Affected by the increased consumption demands before New Year holiday, the price of some products saw an increase.

The average wholesale price of 18 vegetables rose by 4.8 per cent compared to the previous week, of which kidney beans, balsam pear and tomatoes rose by 12.4 per cent, 11.3 per cent and 9.9 per cent, respectively, as a result of the decrease of supplies in the market.

The retail price of chicken and egg rose slightly, with the price of chicken going up by by 0.1 per cent, and egg prices up by 0.1 per cent compared to the previous week.

The wholesale price of meat fluctuated slightly. The wholesale price of pork dropped by 0.5 per cent, while price of lamb and beef rose by 0.6 per cent and 0.2 per cent, respectively.

The retail prices of edible oil and cereals saw a slight decline. Peanut oil and rapeseed oil went down by 0.2 per cent and 0.1 per cent, respectively, and small packages of rice, small packages of flour and soybean oil stayed the same.

The average wholesale price of aquatic products were down by 0.5 per cent compared to the previous week after a rise for four consecutive weeks. The top price drops were seen in crucian, small hairtail and carp, down by 1.9 per cent, 0.8 per cent and 0.4 per cent, respectively.

[Mustang Sally Farm]

Genesus Successfully Delivers Imports to China
15 January 2014
Genesus - The first power in genetics

CHINA - Genesus has successfully delivered two imports to Fujian Province, China, in the last two months.

The first shipment of a full Charter 747 was to Fujian Yichan Agricultural Development Ltd. The second full 747 charter was to Fujian Huatian Eco-Farming Ltd and Zhengbang Group in Xiangji Province, both farms are located near Nanping City.

All three companies are rapidly growing and have identified the excellence of Genesus high health Purebred Registered Breeding Stock as keys to productivity improvement and market penetration.

Mike Van Schepdael, Vice-President of Genesus said: "Genesus is committed to delivering the very best to our customers.

"Our Genetic Research and Development Programme is creating rapid sustainable improvement.

"As the pressures of swine production economics continue, the necessity for producers to become ever more efficient is leading to global recognition of Genesus performance as an insurance for a profitable enterprise."

[Mustang Sally Farm]

Iowa Leadership Team Joins China Pork Outreach Effort
07 February 2014
 

CHINA - A group of Iowa’s future agriculture leaders got a firsthand look at the world’s largest pork market when they traveled to China recently and joined in a US Meat Export Federation (USMEF) programme for the Chinese food-service trade.



Chef Tony Guo prepared a variety of US pork cuts in Guangzhou



I-LEAD team members Vince Sitzman of Prairie City (l.), Gretchen McClain of Stockport (2nd from right) and Jeff Johnson of Riverton (far right) with two chefs at the Guangzhou event



I-LEAD team members (from l.) Adam Stamp of Ankeny and Dan Runner of Gilman, along with Brent Schipper (center) of Conrad with chef Tony Guo and two participants in the USMEF pork seminar at Guangzhou

Twenty-three members of Iowa’s I-LEAD leadership training programme, developed by the Iowa Corn Promotion Board (ICPB) and Iowa Corn Growers Association (ICGA), were in China for an educational tour to better understand the challenges and opportunities that the country represents as an export market. The group participated in a USMEF US pork event in Guangzhou for about 50 regional restaurant managers and chefs representing 19 hotels and restaurants. The I-LEAD members helped personally reinforce the commitment to quality and safety by American producers for the seminar participants.

The appeal of China for the visiting group from Iowa is clear. To put the China/Hong Kong pork market in perspective, the United States exported a record total of 385,214 metric tons of product there in 2012 valued at $832.5 million. Since the average person in China eats about 87 pounds of pork per year, that means the 950.5 million pounds of American pork sold there in 2012 accounted for only about eight-tenths of one per cent of all pork consumed in China – or about enough pork to feed everyone in China for a three-day weekend. Which leaves 362 days to fill with domestic product or imports from other nations.

That doesn’t include China’s potential as a beef market. Last year China imported 314,437 metric tons (693.2 million pounds) of beef from countries around the globe valued at more than $1.3 billion – increases of 345 per cent and 373 per cent, respectively, over 2012. Unfortunately, US beef remains ineligible for shipment to China.

Given the room for growth in China – the No. 3 market for US pork – USMEF continues to pursue opportunities to expand the reach of US pork, including the event in Guangzhou and a similar event in Beijing. Funding for the programmes was provided through the USDA Market Access Programme (MAP) and the Pork Checkoff.

"The experience of going to dinner with the chefs and buyers was eye-opening for our team," said Shannon Textor, director of market development for ICPB who accompanied the I-LEAD team to China. "Quite a few of the pork producers in the class got a chance to share personal information about their farms – how they raise their livestock and how much they appreciate trade with China."

The visit by the I-LEAD team, which was jointly coordinated by USMEF and the US Grains Council, exposed the Iowa visitors to the full range of Chinese meat outlets, from wet markets to the most modern hypermarkets. And they got insights into the value of the Chinese market for US pork producers and exporters.

"China is a great value-added market for the United States pork industry," said Ms Textor. "Nothing goes to waste. They eat the products that aren’t valued here. To see their culture and food consumption patterns is remarkable."

Tony Guo, a chef with more than 10 years of experience working with US pork, provided information and cooking tips at the Guangzhou event on both high-end natural and economical cuts of American pork, including boneless and bone-in pork butt, brisket bones, spareribs, CT butt and pork belly.

Three dozen chefs and restaurant managers from Beijing participated in a similar session in collaboration with a Chinese importer and distributor of US pork, Beijing Aomei Jinghe Meat Company. Executive chef Yue Ning from the Beijing Holiday Inn reviewed the same cuts addressed in the Guangzhou event. Chef Ning prepared a variety of customized recipes for the Beijing event, including Oven Roasted American Pork Steak with Black Pepper Corn and Hoisin Sauce, Slow-Roasted American Pork Ribs with Chili BBQ Sauce, Braised American Pork Ribs with Icing Sugar and Haw Fruit Sauce, and Filipino Pork Adobo with Green Apple.

"This type of seminar is very well received by chefs and restaurant managers," said Ming Liang, marketing manager for USMEF-Shanghai. "We survey the participants after every session, and the feedback is overwhelmingly positive on the usefulness of the information as well as the response to the taste and quality of US pork."

Mr Liang noted that several of the participating chefs had already added US pork items to their menus within weeks of the seminars and others were looking at options.

The China/Hong Kong region is the No. 3 market for US pork exports. Through the first 11 months of 2013, it purchased 385,214 metric tons (849.2 million pounds) of American pork valued at $832.5 million.

[Mustang Sally Farm]

China: Hog Markets
06 March 2014
Genesus - The first power in genetics

CHINA - Looking at the size of the breakdown of the inventory for January 2014, the information from the Ministry of Agriculture (MOA) is difficult to obtain but there appears to be quite a large drop in farm inventory and a reduction n breeding stock numbers, writes Ron Lane, Senior Consultant for Genesus China.

December monitoring results cannot be found. Thus this report has to look at the percentage changes in January from the previous reporting periods.

MOA states that January on-farm inventory was down 4.2 per cent and breeding stock was down 0.6 per cent from the previous reporting period. (not sure if this means December or November, 2013). As compared to November 2013, breeding stock was around 50.33 million and total on farm inventory was around 458.75 million. If one compares to November 2013, then about 19.27 million pigs in inventory changed (decreased) so that on farm inventory would be 439.48 million head.

This seems like an extreme number and it could be that the original count has been adjusted - usually in the month of January, the MOA makes an adjustment of the inventories - or other factors such as disease, cold weather and/or home consumption (mainly backyard farms) for Spring Festival, have all affected the total on farm inventory.

For January, 2013, the breakdown of the inventory for breeding stock was around 51.30 million and total o-farm inventory was around 446.79 million. Again, from the January 2014 report from MOA, it states that on farm inventory was down 2.2 per cent from January 2013 for a total for January 2014 of 436.96 million head. As a comparison, 439.48 (November 2013) versus 436.96 million head (January 2013) — either way means a large drop in on farm pig inventory reported for January 2014.

Profit margins are now showing losses. On 19 February, 2014 it was reported that the losses for a farrow-to-finish operation was RMB199 per market pig (US$32.38). Compared to one month before (15 January), it was reported that profits for a farrow-to-finish operation was RMB49.06 per market pig (US$7.98). This is down by RMB96.01 per market pig (US$15.62) from the week before (8 January) - a 66.18 per cent decrease in one week. This time last year, the estimated profit was RMB382.23 per market pig (US$62.20).

Since the beginning of the year, there has been a continuous decline in profits and now large losses.

A field survey conducted by the Liaoning Provincial Price Bureau (NE China province) illustrated the huge losses that pig producers are currently experiencing.

Current market pig prices have been falling and production costs have been increasing so that pig producers are losing RMB382 per head (US$62.16) for a 105-kg (231-lb.) market pig in a wean-to-finish system. As calculated, a market pig now cost about RMB1,600 (US$260.36) per pig in the province. This includes piglet costs RMB450 (US$73.23), feed costs RMB765 (US$124.49), utilities, interest and marketing costs at RMB120 (US$19.53), vaccination costs RMB30 (US$4.88); mortalities RMB20 (US$3.25) and labour cost RMB180 (US$29.29).

These major costs accounts for a total of RMB1,565 (US$254.68) per pig. Other costs would include waste management, trucking and others to round up to a total cost of about RMB1,600 (US$260.36). The average market pig price in Liaoning during the survey was about RMB11.6 per kg (US$1.89 per kg or $0.86 per pound).

Thus a 105-kg (231-lb) market pig would earn about RMB1,218 (US$198.20), giving an average loss of about RMB382 (US$62.16) per market pig.



What to watch for over the next few months

Last week (20 February), the pig to grain ratio was 5.49:1. This is sharply lower than at 15 January 2014, when the pig to grain ratio was 6.18:1. This fell from 6.52:1 from the week before (8 January). At the end of October, the pig to grain price ratio was 6.59:1. One year ago, on 13 January, the ratio was at 7.52:1). On the whole, in 2013 the national average of pig grain price ratio was 6.15:1 as compared to 6.25:1 in 2012 (fell by 1.6 per cent). The chief reason was related to the pig market losses of more than five months during the spring and summer of 2013.

Recently, Alltech had its 20th anniversary for manufacturing and operations in China. One report from them outlined the world feed milling numbers. Global feed production increased by one per cent to 963 tons, up slightly from 954 million tons in 2012. China is at the top of the list with a total of 189 million tons of feed produced for livestock in 2013 (produced by 9,500 feed mills), the USA (2nd place) produced 169 million tons from 5,236 feed mills and 3rd place was Brazil (67 million tons and from 1,237 feed mills). China has a declining number of feed mills as the State Government has encouraged the expansion in size to facilitate better traceability and to improve product quality. Also, the large scale farms are requiring larger consistent quality. Looking at the breakdown for species in the world: poultry was 46 per cent of total feed production (444 million tons); swine was 243 million tons; ruminants was 196 million tons; aquatic was 40 tons; pet food was 21 million tons and horses was 12 million tons. Sixty percent (60 per cent) of the feed produced was pelleted. Asia had the highest average price of feed with $524 US/ton for finisher and from $480 to $550 for grower feed. (China Feed Industry Association has data that shows 191 million tons of feed industry output for China was produced in 2013, of which 42 per cent was swine feed-a growth of 3.2 per cent over last year.

In 2013, Shuanghui slaughtered 13.310 million pigs with a total of 1.75 million tons of meat produced. The plan for 2014 is to slaughter 17 million pigs and to produce and market two million tons of meat. The annual report, also shows that the company achieved an operating income of RMB44.95 billion (US$7.315 billion) - an increase of 13.21 per cent over last year and garnered a profit of RMB5.148 billion (US$837.80 million) - an increase of 31.62 per cent over 2012 profits.

On 19 February, the NDRC announced that plans were being put in place for the preparation to buy pigs from the market and to store in frozen pork reserves to "prevent the excessive decline in hog prices". The goal is to help to stabilise pig production and to maintain breeding stock inventories.



Genesus Global Market Report
Prices for the week of 24 February 2014


Country

Domestic price
(own currency)

US dollars
(Liveweight a lb)

USA (Iowa-Minnesota) 103.28 USD/lb carcass 76.43¢
Canada (Ontario) 189.39 CAD/kg carcass 62.03¢
Mexico (DF) 27.03 MXN/kg liveweight 92.50¢
Brazil (South Region) 3.34 BRL/kg liveweight 64.72¢
Russia 86 RUB/kg liveweight $1.08
China 11.49 RMB/kg liveweight 85.08¢
Spain 1.2 EUR/kg liveweight 74.73¢
Viet Nam 49,000 VND/kg liveweight $1.05
South Korea 4,716 KRW/kg liveweight $2.00

[Mustang Sally Farm]

Shuanghui Invests in Nanning Pig Project
17 March 2014

CHINA - Chinese meat processor Shuanghui, part of the WH Group is expected to complete the construction of a new plant and distribution centre in Nanning by the end of March.

The Shuanghui Nanning II project will see the investment of RMB 1.5 billion for the contrcution of a chilled meat processing plant.

The project, which is in two phases will see the construction of a 10,000 tonne cold storage facility logistics centre, business centre, R&D and Testing centre as well as a waste treatment centre and other facilities..

The plant will slaughter 2 million pigs a year – more than 5,000 a day and have a total output of around 100,000 tonnes in more than 200 products.

The first phase of Nanning Shuanghui high and low temperature meat food processing production line went into operation late last year.

When the entire project is completed, it is expected to have an annual production worth RMB3.2 billion and it will employ more than 3,000 people as well as helping 20 million pig farmers in the Guangxi Nanning region.

[Mustang Sally Farm]

More Dead Pigs Found in Chinese River
21 March 2014

CHINA - At least 131 dead pigs have been dumped into a major river in east China's Jiangxi Province that provides drinking water to the provincial capital, local authorities have said.

The water authority of Nanchang City, the capital, first discovered dead pigs on Saturday in a section of the 758-km-long Ganjiang River, a major tributary of the Yangtze River.

As of 6 pm on Tuesday, 131 dead pigs had been collected. They are believed to have flowed from the upper reaches of the river, according to the water authority.

Collecting efforts are still under way in the river.

Examination of all water intakes in the city by the environmental and health authorities showed that the tap water is safe for drinking, according to a statement from the municipal government's information office.

The dead pigs have been disposed of safely, added the statement.

In March 2013, thousands of dead pigs were retrieved from the Huangpu River in Shanghai, sparking panic in the business hub as well as satire among the public over tap water safety.

Zhejiang Province's city of Jiaxing, which is located on the Huangpu River's upper reaches, was believed to be the source of the animals.

[Mustang Sally Farm]

Chinese Pork Firm Launched $5.3-Billion IPO in Hong Kong
11 April 2014

CHINA - China's WH Group Ltd, the world's biggest pork company which took over Smithfield Foods, has launched a Hong Kong initial public offering of as much as $5.3 billion in the second-largest ever IPO by a food and beverage company.

The IPO is coming at a time when Hong Kong's stock market has been hit by volatility arising from concerns about political tensions in Russia, slower growth in China and when the US Federal Reserve may raise borrowing costs.

In view of the market conditions, WH Group and some of its shareholders are offering shares in a relatively wide range of HK$8.00 to HK$11.25 each. A total of 3.65 billion new and existing shares will be offered, putting the deal at up to HK$41.06 billion ($5.3 billion), according to a term sheet seen by Reuters on Thursday.

WH Group, whose products include Smithfield ham, Carando pepperoni and Farmland bacon in the United States, has been pre-marketing the IPO since last week. It plans to use some of the proceeds to pay down debt it took as part of its $4.9 billion takeover of US-based Smithfield Foods Inc last year, people familiar with the plans have said.

The group has "a good anchor book", though it has signed no cornerstone investors due to volatile global markets, a source familiar with the deal said, declining to be identified because details of the IPO process have not been publicly disclosed.

Typically, a deal the size of WH Group's would tap cornerstones, which receive a guaranteed allocation in exchange for agreeing to retain their stakes for a set period.

"Volatility is part of the reason," added the source.

Though Hong Kong's shares are trading at their 11-week highs, the benchmark stock index is down about 2.3 per cent so far in 2014, bouncing between gains and losses of more than 7 per cent along the year.

Shares of small Chinese pork producer Huisheng International Holdings Ltd have fallen 14.6 per cent since their debut in Hong Kong on 28 February. Its tiny $32 million IPO, which was swamped by a horde of mom and pop investors, was seen as one gauge for investor demand for consumer stocks.

The WH Group listing would be the world's second-biggest ever food and beverage IPO after Kraft Food Inc's $8.7 billion deal in June 2001. It would also be the largest new listing in the Asia-Pacific since AIA Group Ltd raised $20.5 billion in October 2010.

WH Group could increase the size of the IPO to $6.11 billion if underwriters exercise a greenshoe option to meet additional demand.

Pricing for the IPO is slated for 22 April, with the shares making their debut on the Hong Kong stock exchange on 30 April.

To draw investors to its IPO, WH Group is banking on the growth potential of Chinese demand for pork and processed meat. The takeover of Smithfield will help WH Group's Chairman and CEO Wan Long, known as China's "Chief Butcher," secure a steady supply of pork to meet the expected demand growth at home, people in the industry have said.

[Mustang Sally Farm]

China Hog Markets
18 April 2014
Genesus - The first power in genetics

CHINA - China: it is the pork powerhouse of the world with over 51 per cent of the world’s population of pigs raised within China, writes Ron Lane, Senior Consultant for Genesus China.

Looking at the size of the breakdown of the inventory for February, 2014, the information from MOA is difficult to determine the basic numbers, but there appears to be quite a large drop in on farm inventory and a drop in breeding stock numbers over the past few months. MOA states that January on farm inventory was down 4.2 per cent and breeding stock was down 0.6 per cent from the previous reporting period (not sure if this means December or November, 2013).

As compared to November 2013-breeding stock was around 50.33 million and total on farm inventory was around 458.75 million. If one compares to November 2013, then about 19.27 million pigs in inventory changed (decreased) so that on farm inventory would be 439.48 million head for January 2014. This seems like an extreme number and it could be that the original count has been adjusted ( usually the month of January, the MOA makes an adjustment of the inventories) or other factors such as disease, cold weather and/or home consumption (mainly backyard farms) for Spring Festival, have all affected the total on farm inventory.

For January, 2013, the breakdown of the inventory for breeding stock was around 51.30 million and total on farm inventory was around 446.79 million (again from the January 2014 report from MOA, it states that on farm inventory was down 2.2 per cent from January 2013-thus for January 2014, a total of 436.96 million head. Calculations by either way means a large drop in on farm pig inventory reported for January 2014.

Now if we take an average for January 2014 of 438.2 million on farm inventory and we calculate the sow herd at 50.0 million, then February, 2014 inventory would be 433.03 million head ( down 0.9 per cent from last month and down 1.1 per cent from last year). Breeding stock would be 49.6 million sows (down 0.8 per cent from last month and down 3.5 per cent from last year).

Profit margins are now showing heavy losses. On April 11th, a farrow to finish operation was losing 357 RMB/head ($ 57.48 US/ market pig). Some analysts calculate well over 400 RMB/head ($ 64.40 US/market pig) loss for some newer, more financially leveraged farms. On February 19th, 2014 it was reported that the losses for a farrow to finish operation was 199 RMB/market pig ($ 32.04 US/ market pig). Compared to one month before (January 15th), it was reported that profits for a farrow to finish operation was 49.06 RMB/market pig ($ 7.90 USD/market pig). This is down by 96.01 RMB/market pig ($ 15.46 USD) from the week before-January 8th (a 66.18 per cent decrease in 1 week). Over the past 16 weeks, there has been a continuous decline in profits and now large losses. Many farmers report that the current losses are the worst in 15 years.

The Consumer Price Index (CPI) continues to be quite interesting for the National Government. Previously, when the pork prices were gaining, this rapid increase in pork, gained the attention of the National Government as it greatly affects the CPI. The CPI is made up of about 30 per cent food found in the consumers’ basket. Pork is estimated to be about 1/3 of the food portion of the basket or in other words, about 10 per cent of CPI as a whole. Currently, inflation is around 2.5 per cent for March. Now, low pork prices are keeping the CPI lower.



What to watch for over the next few months

Last week, (April 11th), the pig to grain ratio was 4.4:1 down 12 per cent from last year. On February 20th, the pig to grain ratio was 5.49:1. This is sharply lower than at January 15th, 2014, when the pig to grain ratio was 6.18:1. This fell from 6.52:1 from the week before (January 8th). At the end of October, the pig to grain price ratio was 6.59:1. On the whole, in 2013 the national average of pig grain price ratio was 6.15:1 as compared to 6.25:1 in 2012 ( fell by 1.6 per cent- The chief reason was related to the pig market losses of more than five months during the spring and summer of 2013).

On April 11th, 2014, the average corn price was 2.29 RMB/kg or $0.37 US/kg or 0.17US/lb. The retail price to farmers for soybean meal would be 3.83 RMB/kg or $0.62 US/kg or $0.28US/lb. The national average wheat bran price was $2.02 RMB/kg ($0.33US/kg or $0.15US/lb).
On February 19th, the NDRC announced that plans were being put in place for the preparation to buy pigs from the market and to store in frozen pork reserves to “prevent the excessive decline in hog prices”. The goal is to help to stabilize pig production and to maintain breeding stock inventories. By the end of March, the State had purchased about 65,000 tons. Some prices, especially in NE China spiked briefly, but now, the general overall price is still too low.

The import of over 500,000 tonnes of US soybeans has been cancelled so far in 2014. Other reports indicate that soybean exports to China from other countries have also seen cancellations. International prices are being depressed and some rising fears over China’s economy are also being mentioned by reporters. Originally, the USDA forecasted that China would import 68 million tons of soybeans in 2013/14 crop year, but now that prediction is sitting at 62 million tonnes.

China’s corn production is rebuilding and is estimated to hit record tonnes for the next 2 crop years. Imports will likely be reduced and government grain reserves will be replenished. Already, more than 54.66 million tonnes of corn from the 2013/14 crop year have been purchased and put into government grain bins-March 10th report).

Corn production is estimated at 217 million tonnes for 2013/14 and 218 million tonnes for 2014/2015 crop years (government subsidies direct farmers to grow more corn and fewer soybeans and other crops). Imports for corn are estimated at 4 million tonnes this crop year and 3 million tonnes for next crop year. Imports of sorghum, cassava and DDGs could increase. Sorghum imports have been increasing as farmers find the product to be a good feed ingredient.

[Mustang Sally Farm]

China Hog Market
30 May 2014
Genesus - The first power in genetics

CHINA - China: it is the pork powerhouse of the world with over 51 per cent of the world’s population of pigs raised within China, writes Ron Lane, Senior Consultant for Genesus China.

Looking at the size of the breakdown of the inventory for April, 2014, the information from MOA is indicating 428.52 million on farm inventory and a 46.86 million sow herd. The 428.52 million on farm inventory is down 1.3 per cent from last month and down 3.7 per cent from April, 2013. The sow herd is down 2.2 per cent from last month and is down 6.8 per cent from one year ago (April, 2013). Over 1.05 million sows were eliminated last month. Hog production capacity has significantly been adjusted with the main cause being the loss of farm households. Despite the recent recovery of the market price for live pigs, several farm households are still in financial difficulty. MOA states that since the peak high of November 2013, the on farm inventory has dropped 8.5 per cent or about 36.47 million pigs…more than Canada’s total production for one year. Factors such as disease, cold weather and/or home consumption (mainly backyard farms) for Spring Festival, have all affected the total on farm inventory. Recently, the low prices have been sending sows to market as small farmers are lowering the sow herd size or are totally quitting the business. Recent losses of 400 to 500 RMB/market pig ($64.15 to $80.19 USD/market pig) greatly affects cash flow and bank repayments and with few pigs on a small or backyard farm, these producers can be out of business quickly. With the low prices, many small farms were holding back shipments before and after Spring Festival (January 31st, 2014) in anticipation that the prices would increase. However, the pig weights increased, but the price continued to slide, further increasing losses in profitability.

The large sell off of sows could cause a shortage of market pigs by the end of this year and thus a large increase in market prig and pork prices. This could have a large effect on the Consumer Price Index-something the national government does not like to see happen.

Profit margins are now showing smaller, but still substantial losses. Recently, the farrow to finish was losing 84 to 90 RMB/head ($13.47 to $14.43USD/market pig). On April 11th, a farrow to finish operation was losing 357 RMB/head ($ 57.25 US/ market pig). Some analysts calculate well over 400 RMB/head ($ 64.15 US/market pig) loss for some newer, more financially leveraged farms. On February 19th, 2014 it was reported that the losses for a farrow to finish operation was 199 RMB/market pig ($ 31.91 US/ market pig). Compared to one month before (January 15th), it was reported that profits for a farrow to finish operation was 49.06 RMB/market pig ($ 7.87 USD/market pig). Over the past 20 weeks, there has been a continuous decline in profits with large losses. Many farmers report that the current losses are the worst in 15 years (since December 2nd, 2013 when the pork price was 15.88 RMB/kg.($2.55USD/kg-$1.16USD/lb.) to April, 17th, 2014 when the prices were 10.6 RMB/kg($1.70USD/kg-$0.77USD/lb.)-a 33 per cent plunge in prices). However, since May 1st, 2014, the national price was at 10.84 RMB/kg ($1.74USD/kg-$0.79USD/lb) and after 20 days, the price was at 13.64RMB/kg.($2.19USD/kg-$0.99USD/lb.)-an increase of 25.83 per cent in the market pig prices.



What to watch for over the next few months

On February 19th, the NDRC announced that plans were being put in place for the preparation to buy pigs from the market and to store in frozen pork reserves to “prevent the excessive decline in hog prices”. The goal is to help to stabilize pig production and to maintain breeding stock inventories. By the end of March, the State had purchased about 65,000 tons.

Recently, Mike Van Schepdael, Vice President, Genesus and myself were at a large feed mill in south China and they reported their corn price was 2.45/kg.($0.39USD/kg.-$0.18USD/lb.) $8.00 a bushell posted. However, they mentioned that wheat bran had dropped further from 2.20 RMB/kg. ($0.35USD/kg.-$0.16USD/lb.) to around 1.6 RMB/kg. ($0.26USD/kg.-$0.12USD/lb.).

[Mustang Sally Farm]

China Hog Markets
10 July 2014
Genesus - The first power in genetics

CHINA - China: it is the pork powerhouse of the world with over 51 per cent of the world’s population of pigs raised within China, writes Ron Lane, Senior Consultant for Genesus China.

Looking at the size of the breakdown of the inventory for May, 2014, the information from MOA is indicating 428.09 million on farm inventory and a 46.40 million sow herd. The 428.09 million on farm inventory is down 0.1 per cent from last month and down 3.9 per cent from May, 2013. The sow herd is down 1.0 per cent from last month and is down 7.5 per cent from one year ago (May, 2013). Another 470,000 sows along with the 1.05 million sows from April were eliminated the past 2 months. The current sow inventory is the lowest level in 2 years. Hog production capacity has significantly been adjusted with the main cause being the loss of farm households. Despite the recent recovery of the market price for live pigs, several farm households are still in financial difficulty. MOA states that since the peak high of November 2013, the on farm inventory has dropped 8.6 per cent or about 36.9 million pigs…more than Canada’s total production for one year.

Factors such as disease, cold weather and/or home consumption (mainly backyard farms) for Spring Festival, have all affected the total on farm inventory. Recently, the low prices have been sending sows to market as small farmers are lowering the sow herd size or are totally quitting the business.

The large sell off of sows could cause a shortage of market pigs by the end of this year and thus a large increase in market pig and pork prices. This could have a large effect on the Consumer Price Index-something the national government does not like to see happen. Releasing national government frozen pork stock reserves will only soften the price increase over a short period of time. Low market pig numbers means higher prices and higher CPI.

Profit margins are now showing a further increase in losses from last month (still substantial losses). Recently, the farrow to finish farm was losing 163 RMB to 211 RMB/market pig ($ 26.27 USD to $34.00/market pig). On May 28th, the farrow to finish farm was losing 84 to 90 RMB/head ($13.54 to $14.50USD/market pig) and on April 11th, a farrow to finish operation was losing 357 RMB/head ($ 57.53 US/ market pig). Some analysts calculate that the loss for some newer, more financially leveraged farms is even higher. Compared to January 15th, it was reported that profits for a farrow to finish operation was 49.06 RMB/market pig ($ 7.87 USD/market pig).

The Consumer Price Index (CPI) continues to be quite interesting for the national government. Previously, when the pork prices were gaining, this rapid increase in pork, gained the attention of the national government as it greatly affects the CPI. The CPI is made up of about 30 per cent food found in the consumers’ basket. Pork is estimated to be about 1/3 of the food portion of the basket or in other words, about 10 per cent of CPI as a whole. CPI increased to 102.50 Index Points in May (2.5 per cent ) from 101.80 Index Points in April. This has been the highest CPI this year. The price of pork in China fell 7.2 per cent , contributing to a decline in the April CPI. As the prices increased in May, the CPI increased by 0.7 per cent . For now the pork prices are keeping the CPI lower, but a substantial increase, likely towards the end of this year, will cause national government concern. As a measure, when pig prices increase, CPI should increase.



What to watch for over the next few months:
•Last week (June 12th), the pig to grain ratio was 5.09:1. On May 28th, the pig to grain ratio was 5.43:1, up 2.27 per cent from the week before. On April 11th, the pig to grain ratio was 4.4:1; on February 20th, the pig to grain ratio was 5.49:1; and on January 15th, 2014, the pig to grain ratio was 6.18:1. This fell from 6.52:1 from the week before (January 8th). At the end of October, the pig to grain price ratio was 6.59:1.
•Currently, it is the 20th week with continuous pig to grain ratio that is below the breakeven point 6:1.
•Recently, the national average corn price was 2.54 RMB/kg.($0.41USD/kg-$0.19USD/lb.); wheat bran was 1.95 RMB/kg.($0.31USD/kg-$0.14USD/lb.) and soybean meal for retail to farmers was 4.10RMB/kg.($0.66USD/kg.-$0.30USD/lb). The average cost for feed was 3.28 RMB/kg ($0.53USD/kg-$0.24/lb)
•The WH Group, the largest pork producer in the world, had recently removed their IPO plans from the Hong Kong stock market. The Group, formerly known as Shuanghui and who bought Smithfield Foods last year, stopped the offer as not only because the Hong Kong stock market had dropped by 10 per cent , but also, there was a very weak demand for the shares as investors were staying away. The huge payments to company executives also helped to shut down the proposed IPO. Now US investment bank, Morgan Stanley is looking for solid investors for a deal priced at 20 per cent below the original offer from only a few months ago.
•Soybeans were China’s largest agricultural import during 2013. The Country brought in 38 Billion USD value of soybeans during 2013 with more than 1/2 from Brazil and close to 1/3 from the USA. Along the same vein, Bloomberg reports that China by 2021 will become the world’s largest corn importer. This year, China is expected to import about 2 per cent of its total consumption. This will increase each year so that by 2024, it could import 7.2 per cent of its needs.

[Mustang Sally Farm]

China Halts US Pork Imports Over Feed Additives
14 August 2014

CHINA - China has barred pork imports from six US processing plants and six cold storage facilities effective on Wednesday to enforce its ban on the use of a feed additive that promotes lean muscle growth, the US Department of Agriculture said on Tuesday.

China currently requires third party verification that US pork shipped to the country is free of the additive ractopamine, which is sold for hog farm use under the name Paylean.

Pork packing plants now ineligible to export to China include Tyson Foods plants in Perry and Storm Lake, Iowa, along with the company's facility in Logansport, Indiana.

Other processors listed included a Hormel Foods Corp plant in Fremont, Nebraska, Triumph Foods in St Joseph, Missouri. and Quality Pork Processors, Inc in Austin, Minnesota.

Tyson, Hormel and Triumph have not so far replied to requests for comment.

In 2013, US pork exports to China totaled 312,138 tons, valued at $645.3 million, according to the Global Trade Atlas. Overall pork exports worldwide last year totaled 7.5 million tons valued at $20.4 billion.

"China is by far the world's largest pork producer and consumer. Therefore, it is really not possible to make projections about how certain events, such as plant delistings, will impact US exports to China," said US Meat Export Federation spokesman Joe Schuele.

Dan Vaught, economist with St. Louis-based Doane Advisory Services, said that while cutbacks in Chinese pork purchases were not supportive of US market prices, the impact could be tempered by demand both at home and from other buyers.

"This has been an ongoing issue and doesn't seem likely to have that big of an impact given the persistent strength in domestic demand," he said, adding there was also continuing strong buying from four of the US major export customers Japan, South Korea, Canada and Mexico

[Mustang Sally Farm]

China Hog Market
21 August 2014
Genesus - The first power in genetics

CHINA - It is the pork powerhouse of the world with over 51 per cent of the world’s population of pigs raised within China writes Ron Lane, Senior Consultant for Genesus China.

Looking at the size of the breakdown of the inventory for June, 2014, the information from MOA is indicating 428.18 million on farm inventory and a 45.94 million sow herd. The 428.18 million on farm inventory is up 0.2 per cent from last month and down 4.8 per cent from June, 2013.

The sow herd is down 1.0 per cent from last month and is down 8.2 per cent from one year ago (June, 2013). Again in June, another 464,000 sows plus another 470,000 sows in May along with the 1.05 million sows from April were eliminated during the past three months. The current sow inventory is the lowest level in four years.

It is expected that there will be more sows lost in July. (July, 2014 report has just been released- farm inventory (429.46 million is up 0.3 per cent from June and down 5.4 per cent from July, 2013.

The sow herd is down 1.2 per cent from last month (now at 45.39 million sows) and is down 9.1 per cent from one year ago (July, 2013). Another 550,000 sows went to market in July, 2014. The 9.1 per cent loss in sow numbers is about 4.1 million sows-maybe about two-thirds (2/3s) of the total number of sows in the USA-number two in the world for sow numbers.

Hog production capacity has significantly been adjusted with the main cause being the loss of farm households. Despite the recent recovery of the market price for live pigs, several farm households are still in financial difficulty.

MOA states that since the peak high of November 2013, the on farm inventory has dropped 8.1 per cent or about 35.5 million pigs… more than Canada’s total production for one year. Factors such as disease, cold weather and/or home consumption (mainly backyard farms) for Spring Festival, have all affected the total on farm inventory. Recently, the low prices have been sending sows to market as small farmers are lowering the sow herd size or are totally quitting the business.

The large sell off of sows for the past 11 months will cause a shortage of market pigs by the end of this year and thus a large increase in market pig and pork prices. This could have a large effect on the Consumer Price Index-something the national government does not like to see happen.

Releasing national government frozen pork stock reserves will only soften the price increase over a short period of time. Low market pig numbers means higher prices and higher CPI.

The Consumer Price Index (CPI) continues to be quite interesting for the national government.

Previously, when the pork prices were gaining, this rapid increase in pork, gained the attention of the national government as it greatly affects the CPI. The CPI is made up of about 30 per cent food found in the consumers’ basket. Pork is estimated to be about 1/3 of the food portion of the basket or in other words, about 10 per cent of CPI as a whole. CPI increased to 102.30 Index Points in June (2.3 per cent) down by 0.2 per cent from May (102.50 index points in May and 101.80 Index Points in April).

For the first six months of 2014, the CPI has averaged 2.3 per cent. The price of pork in China fell 7.2 per cent, contributing to a decline in the April CPI. As the prices increased in May, the CPI increased by 0.7 per cent.

Currently, the pork prices are keeping the CPI lower, but a substantial increase, likely towards the end of this year, will cause national government concern. As a measure, when pig prices increase, CPI should increase.

Profit margins are still showing losses from last month (still substantial losses). Recently, the farrow to finish farm was losing 177 RMB/ market pig ($ 28.80 USD/market pig) for an average for the month of June On 28 May, the farrow to finish farm was losing 84 to 90 RMB/head ($13.67 to $14.64 USD/market pig) and on 11 April, a farrow to finish operation was losing 357 RMB/head ($ 58.09 US/ market pig).

Some analysts calculate that the loss for some newer, more financially leveraged farms is even higher. Compared to 15 January, it was reported that profits for a farrow to finish operation was 49.06 RMB/market pig ($ 7.98 USD/market pig).
•June Monthly Averages: market pig price was 12.80 RMB/kg ($ 2.08 USD/kg-$ 0.94 USD/lb.); pork price was 20.32 RMB/kg ($ 3.31 USD/kg-$ 1.50 USD/lb.) and piglet prices were 24.94 RMB/kg ($ 4.06 USD/kg-$1.84 USD/lb.).
•15 August the market pig price ranged from a low of 14.4 RMB to a high of 15.8 RMB/kg ($ 2.34USD/kg to $ 2.57 USD/kg-$ 1.06USD/lb to $ 1.17USD/lb.)
•Last week, 15 August, the pig to grain ratio was 5.58:1(up 5.9 per cent from 18 July when the pig to grain ratio was 5.25:1). On 12 June, the pig to grain ratio was 5.09:1. On 28 May, the pig to grain ratio was 5.43:1, up 2.27 per cent from the week before. On 11 April, the pig to grain ratio was 4.4:1; on 20 February, the pig to grain ratio was 5.49:1; and on 15 January, 2014, the pig to grain ratio was 6.18:1. This fell from 6.52:1 from the week before (8 January). At the end of October, 2013 the pig to grain price ratio was 6.59:1. For most weeks this year, the pig to grain ratio has been below the traditional breakeven point of 6.00:1.
•The WH Group, the largest pork producer in the world, had removed their IPO plans from the Hong Kong stock market this past Spring. The Group, formerly known as Shuanghui and who bought Smithfield Foods last year, re-posted the IPO and was able to raise 2.05 billion USD, which is about 50 per cent less than what they had hoped to raise with the initial IPO in April. WH Group sold 2.57 billion shares at a fixed opening price of $ 0.79 USD (about 4.86 RMB/share). Shares were up 6.5 per cent on the first day of trading.
•For 11 consecutive months, the sow numbers declined to the July level of 45.4 million head (a four year low). With the decline in the number of sows, then the supply of piglets will be a tight balance for the second half of 2014 (416.25 million piglets-a 7 per cent decrease compared to second half of 2013. The full year expected piglet supply is 825.91 million head-down 3.5 per cent compared to the full year in 2013. The first half of 2015 is expected to continue to have a decline in piglet numbers.
•According to the provincial animal health monitoring and early warning center for the 480 pig farmers that are monitored, the center shows that the average loss for the first half of the year for a slaughter pig to be 139 RMB ( $22.61 USD/market pig). The cost to produce a piglet at birth (sow feed, labour, vaccines, etc.) is about 300 RMB/piglet ($ 48.81/piglet). Raising the piglet to about a weight of nine kilograms (about 20 pounds), will cost about 100 RMB more ($ 16.27USD/piglet). Total cost to nine kilograms (20 pounds) is about 400 RMB ($ 65.08 USD/piglet). However, the sale price is only 320 RMB ($ 52.07 USD/piglet) an 80 RMB ($ 13.02 USD) loss for the first six months of 2014.
•A recent survey from Guangdong province—near Hong Kong, indicates some current cost of production for the first half of 2014. The average cost to produce a grower to finish market pig for slaughter is 1,563.6 RMB ($ 254.40USD/market pig). Both feed costs and labour costs are up from last year. The average cost for feed is 919 RMB/market pig ($ 149.53 USD) and the price of labour is 119.5 RMB ($ 19.44 USD). Labour is up 16.9 RMB ($ 2.75 USD or 16.5 per cent from last year). The veterinary charges were 22.2 RMB ($3.61 USD) and the cost for the grower pig was 455.1 RMB ($ 74.05 USD) for the 18.3 Kgs.-40.3 lbs. pig. The average grower pig price is down 19.9 RMB ($ 3.24 USD) from last year. Average slaughter price was 1503.6RMB ($244.64 USD) with an average profit loss of 60 RMB ($ 9.76 USD) per market pig. Interesting note, when they break down the scale of farms and losses, the following trend was noted: large scale farms lost 103.6 RMB ($16.86 USD); medium scale farms lost 118.4 RMB ($ 19.26 USD) and small scale lost the least at 8.3 RMB ($ 1.35 USD). Large scale farms probably have some feed price advantage and small scale farms may not state actual labour charges.
•For 2014, the Ministry of Financial has provided 1.2 billion RMB ($195.2 million USD) to purchase breeding livestock and frozen semen directly to the farmers. Breeding pigs received 661 million RMB ($ 107.5 millionUSD).

[Mustang Sally Farm]

Genesus - The first power in genetics

CHINA - China: it is the pork powerhouse of the world with over 51 per cent of the world’s population of pigs raised within China, writes Ron Lane, Senior Consultant for Genesus China.

Looking at the size of the breakdown of the inventory for August, 2014, the information from the Ministry of Agriculture (MOA) is indicating 432.04 million on farm inventory and a 45.03 million sow herd. The 432.04 million on farm inventory is up 0.6 per cent from last month and down 5.9 per cent from August, 2014.

The sow herd is down 0.80 per cent from last month and is down 10.0 per cent from one year ago. Again in August, another 360,000 sows were sold, culled and/or eliminated from the total national herd.

Along with the 550,000 sows in July, the 464,000 sows in June plus another 470,000 sows in May and with the 1.05 million sows from April, the past 5 months has seen more than 2.89 million sows eliminated.

The current sow inventory is the lowest level in 4 years. It is expected that there will be more sows lost in September. The 10.0 per cent loss in sow numbers is about 4.5 million sows-more than 75 per cent (three-quarters) of the total number of sows in the USA-number 2 in the world for sow numbers. Hog production capacity has significantly been adjusted with the main cause being the loss of farm households.

Despite the recent recovery of the market price for live pigs, several farm households are still in financial difficulty. MOA states that since the peak high of November 2013, the on farm inventory has dropped 5.8 per cent or about 26.7 million pigs … almost Canada’s total production for one year (Canada is around 8th/9th in the world for production).

Factors such as disease, cold weather and/or home consumption (mainly backyard farms) for Holidays, have all affected the total on farm inventory. Recently, the low prices have been sending sows to market as small farmers are lowering the sow herd size or are totally quitting the business.

The Consumer Price Index (CPI) continues to be quite interesting for the national government.

Previously, when the pork prices were gaining, this rapid increase in pork, gained the attention of the national government as it greatly affects the CPI. The CPI is made up of about 31.8 per cent food found in the consumers’ basket. Pork is estimated to be about one-third of the food portion of the basket or in other words, about 10 per cent of CPI as a whole. CPI increased to 102.00 Index points for August down from July by 0.3 per cent (July was 102.30 Index points). The price of pork for China fell 3.1 per cent, contributing to a decline in the August CPI. Currently, the pork prices are keeping the CPI lower, but a substantial increase, likely towards the end of this year, will cause national government concern.

As a measure, when pig prices increase, CPI should increase. National inflation target for 2014 is 3.5 per cent.

At the end of the first week of September, the national average pig price was 14.51RMB/kg (US$2.36/kg; $1.07/lb.), which is a decrease of 0.68 per cent from the previous week. Since the beginning of July, the national market pig prices had continued to improve, up more than 16 per cent for the 7 week duration. According to the Ministry of Commerce, the wholesale price of fresh pork also rose from 19.32RMB/kg ($3.14/kg; $1.43/lb.) on July 4th to 21.01RMB/kg ($3.42/kg; $1.55/lb.) on September 5th, 2014.
Ranking for pork production by country: China (50 per cent); USA (10 per cent); Germany (5.3 per cent); Spain (3.4 per cent); Brazil (3.1 per cent), Russia (2.0 per cent); Viet Nam (2.0 per cent) and Canada (1.7 per cent).
A new benchmark for cost of production in China is about 1,300RMB/pig ($211.52/pig).
The current decline in market pig production suggests that for a long period of time in the future, the country will be in a tight state of supply of market pigs, thus pork price must have an upward movement or that imports from other countries may increase. The annual average sow number for 2014 is estimated to be 46.35 million sows.
Swine Production and Marketing Projections for China


The Mid-Autumn Festival failed to increase the demand for pork (usually pork demand around a national holiday improves). After pig and pork prices have risen for 7 weeks just prior to the holiday, the prices flattened again. The next holiday will start on October 1st-Golden Week. Many producers held onto the pigs hoping for an increase in prices, but instead more slaughter pigs came to market which caused the slaughter numbers to go up and the market price to drop this week.
For 12 consecutive months, the sow numbers declined to the August level of 45.03 million head (a historical low). With the decline in the number of sows, then the supply of piglets will be a tight balance for the second half of 2014 (416.25 million piglets-a 7 per cent decrease compared to 2nd half of 2013. The full year expected piglet supply is 825.91 million head-down 3.5 per cent compared to the full year in 2013. The first half of 2015 is expected to continue to have a decline in piglet numbers.
Projected slaughter numbers and weights for 2014; include a total of 720 million head of market pigs will be slaughtered giving a total of 55.39 million tonnes of pork with an average carcass weight of 76.9 kgs of carcass—this weight is up 0.3 per cent from last year. Of this pork: 68 per cent is consumed as hot, fresh meat: 17 per cent is consumed as chilled meat and 15 per cent is consumed as further processed products.
Projections for the first half year of 2015:
Total sow inventory will gradually increase
Total hog and pork output will decrease about 1 per cent during this time frame
Total pig production costs will increase
Pork supply shortage will be largest in the second quarter of 2015
The pig marketing price will be positive during this time with about 10 per cent profit over expenses.
The piglet supply will be lower during this time
The pig marketing price will increase and so will the cost of production.
There will be insufficient breeding gilt numbers to assist with the increasing and regular replacement of culled/dead sows. State funds are very difficult for swine farmers to obtain