China’s hog futures tumble as spot prices and production outlook weigh on market

(VAN) China's live hog futures fell nearly 5% on 19 May, hitting the lowest level since their January launch, as weak spot prices and expectations of improved production weighed on the market.

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Reuters reports that live hog futures on the Dalian Commodity Exchange were last down 4.7% at 23,580 yuan ($3,663.94) per tonne.

Analysts said large volumes of heavy pigs being sent to slaughter caused the weakness in spot prices, which have fallen sharply since the start of the year. Spot prices were around $18-$20 per kilogramme on 18 May.

"The market expects that there will be more pigs going forward. Feed sales are pretty good, up from last year and also from the previous month... Most of the demand is from the pig sector," said Sinolink Futures analyst Wang Xiaoyang.

"Some people in the industry think that pig production might climb back to pre-ASF levels in the second half of the year, on the condition that there won't be severe outbreaks in the south during the rainy season," said Wang, referring to the African swine fever outbreak that is deadly to pigs.

The current off-season for pork consumption also weighed on the market.

"Supplies are continuing to recover but demand has not kicked off," said Yuan Song, research director at China-America Commodity Data Analytics.

"Demand will eventually increase, but in the longer term prices will be on a downward cycle as the industry's production capacity recovers and the number of sows rise."

($1 = 6.4357 Chinese yuan)

Tr.D

(Reuters)