Last week US hog futures jumped almost 10₵ lb. A phenomenal increase triggered by the realisation that we saw coming - China will need pork. ASF has devastated China's pork supply.

It was announced last week China bought 23,900 metric tonnes of US pork, despite tariffs at near 70 percent. The African swine fever (ASF) black swan event we have been predicting for weeks is now being recognised by the market. (Black swan event is an event in human history that was unprecedented and unexpected at the point it occurred.)

This past week we were at VIV Asia in Bangkok, Thailand. Chinese industry people speculate that China's production could be down 20-50 percent by the time ASF gets under somewhat control. 20 percent down is equal to US production. 50 percent is incomprehensible.

This week we were asked if summer US lean hogs could reach $1.20 lb. Our answer: we wouldn’t be surprised. PED was nothing compared to this.

This week in China the market hogs jumped from 13 to 16 rmb/kg live weight or near $50 per head (88₵ to $1.08 lb), 20₵ times 250 lbs. = $50. Expectation is China hog prices will reach 20 – 23 rmb/kg - $1.30 - $1.60 US /lb.

We expect to see all global pig markets to reach record levels at some point this cycle.

The market jump we are seeing in US lean hog futures isn’t anytime too soon. The industry has been losing money for too long. Cash prices are still below breakeven but daily price increases are getting all too break-even quickly.

Last Friday the US calculation for the prices you could pay at market for a 45 lb feeder pig for July hog market delivery was $84.50 US, a reflection of the profitability.

In China 15 kg (34 lb) feeder pigs last week were 750 rmb ($111 US). While 7 kg pigs are 550 rmb ($82 US). In the meantime publicly traded swine companies have seen their shares move five times higher than they were in August. All in speculation of the massive profits expected in the Chinese hog markets.

To show how bizarre this whole thing is getting, US customs seized 1 million lbs (454 metric tonnes) of pork trying to be smuggled from China at the port in New Jersey. With the current hog price in China double the US, we speculate that this pork will be highly likely to be ASF positive. Border diligence must be prevalent like never before.

Figan

This week we’ll be in Spain at the Figan Swine Exhibition in Zaragoza Spain: we will report our observations on the Spanish market in next week's commentary.

VIV Asia 2019 Bangkok

Last week the Genesus team, which included representation from Canada, China, Philippines, Thailand, UK and Vietnam, exhibited at VIV Asia held in the capital city of Bangkok. We were pleased to be joined also by our partners, Inspired Nutrient, who are our distributors for Genesus imported products in Thailand, and the owner Trevor Shields of Glenmarshal Sires, UK, one of our Global AI distribution partners.

This is a massive exhibition with over 1250 International exhibitors attending. Aqua, swine and poultry departments were well represented and there were many technical presentations on site and several off-site including "Pig Health 2019", "Managing Change hosted by Positive Action" with several international experts including our very own Vice President Mr Mike Van Schepdael.

The Genesus booth was very busy, we meet many clients, friends and some new potential customers from developing markets such as India, Myanmar and Indonesia.

Although we face the challenge of ASF and a lot of talk was about the herd size reduction in China, this is causing serious consolidation within the Chinese swine industry.

Chinese companies within the swine industry are struggling, down-sizing and indeed disappearing due to the effect of ASF, though most of the larger swine businesses remain positive for the medium- and long-term, expecting to see the huge upside of higher pig prices for the next few years.