According to USDA Foreign Agricultural Service, production post forecasts China’s 2016 swine herd at 421.7 million head, a slight decrease from 2015 USDA’s official estimate due to decreasing numbers of sows.
Small farm operators continue to leave and stricter environmental laws are factor in reducing swine numbers. China’s local governments are using tough new environmental rules to shut down or relocate pig farms, especially those located near densely populated areas. China’s Environment Protection Act went into effect on January 1, 2015, and contains provisions for increased financial penalties for livestock breeders that mishandle waste.
On the other hand, the hog to corn price ratio has remained below the profitability breakeven indicator of 6:1 for 18 months up to June 2015. The extended period of losses has drained farmers’ cash reserves, forcing them to cull more 38 million sows. However, industry sources believe the swine herd will recover by the end of 2016 driven by high sow, piglet and hog prices.
The central government is also encouraging the development of large scale swine farms. These farms usually have better technology and management skills, resulting in higher sow production ratio.
Pork production will be back to normal levels in 2016. Post forecasts 2016 pork production at 56.2 million tons. Better genetics, combined with expected lower feed prices and higher pork prices, will promote slaughter at heavier weights to maximize profitability. As a result, the estimated slaughtering weight is increased from 100kg to 120kg. Pork prices started to rise upward from March 2015, encouraging farmers to increase sow herds.
Wednesday September 23, 2015/ FAS-USDA/ United States.