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China hog prices hit 14-month high as African swine fever slashes output

Chinese hog prices marched to their highest in 14 months and look set to keep rising as the worst disease outbreak to hit the country's vast pig herd in years chops supply.

11 March 2019, at 9:40am

Reuters reports that live hog prices in major consumption and production areas rose seven percent on average today (11 March), compared with last Friday, to 15.09 yuan ($2.24) per kilogram, according to data provided by consultancy China-America Commodity Data Analytics. Even though demand is typically weak at this time of year, prices across the country surged almost 20 percent since early March.

The surge comes with a months-long outbreak of African swine fever, with 111 confirmed cases of the disease in 28 provinces and regions across the country. There is no cure and no vaccine for the disease that is highly contagious and fatal to pigs, though it does not affect humans. Around one million pigs have been culled so far in an effort to try to control the spread.

"The main reason (for rising prices) is there are fewer pigs," said Yao Guiling, analyst with China-America Commodity Data Analytics. Some farmers are also reluctant to sell now, she said, anticipating further tightening of supplies and higher profits in coming weeks.

"Pig production capacity has been falling in the past two years, then in the second half of last year, African swine fever outbreaks further affected restocking, pushing up prices," Yao said.

Some have also abandoned farming, after government measures to tackle the disease pushed prices too low and made trade impossible.

China's pig herd fell 13 percent in January compared with the same month a year earlier, while the number of breeding sows was down 15 percent from the previous year, according to data from the Ministry of Agriculture and Rural Affairs.

But analysts and traders said farms that can keep out the disease could be in line for bumper profits in coming months.

"Our goal is to survive. If we survive, life afterwards will be good," said a manager at a major pig producer located in one of the regions that has reported an African swine fever outbreak. He declined to be named as he was not authorised to talk to the media.

Shares in leading pig farming companies also continued to rise on Monday, as investors bet on tightening pork supplies and strong government support for leading producers.

Top farmer Wens Foodstuff Group Co, Ltd rose four percent, while rapidly growing Tech-bank Food Co Ltd was up three percent. ($1 = 6.7247 Chinese yuan renminbi)