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Time ripe for the launch of live pig futures

by 5m Editor
4 July 2007, at 11:32am

CHINA - Live pig futures is expected to be launched in the second half of this year or in the first half of next year, according to insiders from the China Animal Agriculture Association.

China is a big pig breeder and pork is the most consumed meat in the country. Pig breeding is one of the main income sources for farmers. Due to blocked market information transmission between supply and demand, pig culturists can only arrange their production according to price fluctuations in the local pig market, which results in unbalance supply and demand in the whole market.

A nationwide price hike on live pigs and pork since May is a demonstration of the defects of market information asymmetry. A reaction lag of supply to price is obvious on the Chinese live pig market and sharp price fluctuation has a negative impact on the development of the entire industry. The launch of the pig futures will help industrialize pig production.

As the main part of the whole industrial chain, live pig-breeding faces the highest risks yet the lowest profits. With a lower industrialization rate, China's live pig industry is retardant in risk prevention and can't reflect the fluctuation trend on the whole market in time, said insiders. Breeding, processing and trading companies on the pig industrial chain can't adjust their production plans according to demand changes.

Experts said that the time is ripe for the launch of live pig futures in China. Firstly, the pig spot transaction scale is large in China and annual pork output has reached nearly 50 million tons. Quality standards and inspections and quarantine regulation systems are perfect and products are easy to be graded.

Source: China Daily,

Further Reading

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5m Editor