Rising Productivity in China’s Swine Sector to Support Better Feed Demand in 2016 – Rabobank

The demand for feed by China’s pig sector will remain under pressure for the balance of 2015, but is expected to rebound in early 2016, Rabobank reports. Feed producers can expect to capitalize on a recovery in the Chinese sow herd forecast to materialize in early 2016, combined with increased productivity in the sector as the industry continues to implement its plan for modernization and consolidation.

Rabobank’s latest report noted that piglet prices were trending upward prior to prices for hogs or pork, indicating a tight supply of piglets due to a shrinking sow herd. In February of this year, China’s total hog herd was down 10% to 389.7 million head, and the country’s sow herd was down 18.5% to 41.1 million head year on year.

Despite these numbers, the hog-to-corn ratio, which is the indicator of farmer’s margins, remains below the breakeven point, showing that prices have yet to reach the point where farmers are making positive margins.

But looking forward, the number of piglets per sow per year, and carcass weights are increasing, and Chuying Agri, one of China’s largest hog farming companies, is expected to increase production by 50% this year, driving an increase in demand for feed.