After two consecutive years of prosperity, many Chinese hog producers are anticipating a loss for 2013, driven by higher feed prices in the past year, according to the U.S. Grains Council.
Village-level swine producers in China told a U.S. Grains Council team this week it currently costs them 12 to 13 renminbi per kilogram — about 91 cents a pound — to produce a hog to market weight, while the Chinese packer will give them about 99 cents a pound for a live hog. That compares with peak live hog prices of about $1.47 a pound in the summer of 2011. As a result, many producers are drawing down inventories and culling sows to reduce cost, the U.S. Grains Council said.
“Although Chinese swine producers have seen better days, this certainly isn’t the time to get bearish on Chinese agriculture — in fact, just the opposite,” Kevin Roepke, the U.S. Grains Council’s manager of global trade, said in a written statement. “Many producers are positioning themselves to rapidly build their herds back up once grain prices moderate and hog margins recover.”