The African Swine Fever (ASF) epidemic, a viral disease that affects only pigs caused a series of changes in China’s live hog market. China Daily reported that, the viral disease caused the price of live hogs to reach a historical high of nearly RMB40 per kilogram in the third quarter of 2019 due to shortage of the supply. At the beginning of 2020, the hog breeding industry jumped from the frying pan into the fire when China became the epicentre of the pandemic coronavirus. The Hog production was further affected by the lockdown of the major cities in China. However, at the end of February 2020, the Ministry of Agriculture and Rural Affairs claimed that the hog industry is now making progress in recommencing hog production.

Hogs Breeding Intensified

Data from the ministry confirmed that a total of 28 provincial regions registered growth in the number of hogs in March 2020. The ministry also announced that stock of China’s breeding sows in 400 ministry-monitored districts grew by 2.8 per cent a month in March, increasing for the sixth consecutive month. China currently has more than 370,000 pig farming businesses in operation. Since March, China added 18,000 pig farming enterprises, surging 131% from the same period last year. “China is now seeing a transition from relatively tight supplies to a more balanced situation soon,” according Zhu Zengyong, a researcher with the Chinese Academy of Agricultural Sciences (CAAS). 

This  significant recovery was mostly due to a series of policies implemented by the agricultural ministry of China to encourage hog production and stabilize pork prices affected by African swine fever and other recurring factors. The ministry also strengthened the inspections on the implementation of supportive policies, promote the work resumption of new projects and intensify supervision over pig transportation

Hog Feed Supply

Reports from reliable market source say that China is soon to buy 10 million MT of soybean and 20 million MT of corn for its stockpile. According to China National Grain and Oil Information Center, China is also receiving 10 million MT of soybean shipment in May 2020 from Brazil. This is great news for the hog industry as to resupply the swineherd feed, further confirm the recovery of the hog industry in China.

Implication to Palm Oil

Supply chain disruption due to viral crisis has been restored by China’s continuous effort. The growth of the industry worth Billions of dollars has been gearing up and expected to be running in a full swing by 4^th quarter of 2020. This may indirectly affect the palm oil consumption in the market. The high volume of soybean imports and the increase in the crushing activity will add more soybean oil to the market, that will disrupt the palm oil market share.  Further reading on soybean recovery and its implication on palm oil can be read via the following link.

Recovery in China’s Soybean Crushing Activities Poses Threat to Malaysian Palm Oil Imports in China

Prepared By:  Theventharan Batumalai 

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