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The market overview

On the supply side, the slaughtering volume of domestic pigs increased to 17.5 million head this February, with a y-o-y growth rate of 37.2%. It is also much higher than the average slaughtering volume of 15.8 million head in February from 2013 to 2017. However, the domestic sow and live hog inventories kept going downward this February, and both reached a historic low since 2014.

As for pork import, China imported 71,712 tons of pork this February, decreasing by 35% on a y-o-y basis. From this January to February, the total pork import volume was 188,070 tons, declining by 15.3%, compared with that of last year. The pork import volume this February also hit a new low since September 2015.

When it comes to prices, the situation also looks gloomy. The live hog price, piglet price, wholesale price and retail price continued to fall sharply this March, compared to the same period last year. We can find that, the closer it gets to the end consumers, the decreasing rate of the price gets smaller. In other words, during this downward phase of the pork cycle, China’s pork producers suffer the largest losses in the pork supply chain. The hog-breeding margin fluctuation verifies this point. It declined by 162.8% on a y-o-y basis, indicating that Chinese pork producers lost CNY224 per hog this March. Due to such huge negative margin and the expected slack pork consumption after China’s traditional Spring Festival holidays, domestic pork producers get more and more cautious in replenishing their hog stock for the future market.

As predicted in our previous quarterly pork report, the most popular imported pork products in Q1 2018 included frozen pork spareribs, front feet, hind feet and pig ears. Their sales volume was mainly driven by traditional consumer demand during China’s Spring Festival. For Q2 2018, imported frozen pork heads, moon bones, soft bones and kidneys are expected to sell well, due to the seasonal demand for sauced heads and BBQ products in summer.

Welcome to IQC Insights

Based in Shanghai, IQC insights is a research & analysis company focusing on China’s animal protein industry.

Through our on-the-ground research approach, including regular market visits, market price tracking and communication with a wide range of official and industry participants, we are able to offer compact, meaningful and data-driven insights.

Our mission is to provide our clients and partners with exclusive and trustworthy analysis and market understanding to guide and inform on major trends and the driving forces shaping the future of China’s animal protein markets.

For further information, please visit our website www.iqc-insights.com.