China's pig herds will remain in surplus this year despite new government targets to tame oversupply, industry officials said, as the world's biggest pig breeder struggles to stage a recovery for multi-year low hog prices, reported Reuters.
Pig enterprises in China sold farms and stakes last year to raise cash after an aggressive expansion drive led to plummeting hog prices, rocketing debt and mounting losses when demand took a downturn.
Beijing in response lowered the national target for normal retention of breeding sows to 39 million from 41 million to control the nation's expanding production capacity.
But increasingly productive sows and a reluctance in companies to destock will keep herd size at high levels and prices low.
"We are going to have to continue to further reduce the sow herd ... Objectively, 39 million sows will still lead to a surplus, the rate of decline is still not enough," an official with a large livestock firm told Reuters. He declined to be named due to sensitivities of the matter.
The official said his firm will sell more farms this year, especially those prone to outbreaks of African swine fever, as part of continuous cost-cutting measures.
"We do have an excess of pig farms for the number of pigs we need to raise," he said.
The industry's pace of capacity reduction is also expected to be slow as companies dig in their heels and wait out the price slump after making heavy investments.
"The overall production capacity is relatively loose and the pig market will face the risk of phased fluctuations in the process of rebound," Alice Xuan, vice director of livestock and feed department at Shanghai-based agro-consultancy JCI, told a conference.
She said the target number of breeding sows needs to be further reduced, ideally to 35 million heads.
JCI pegged China's 2024 pig production at 717 million pigs, a dent from 727 million pigs last year.
Dalian most active hog futures DLHcv1, which have been declining since it started trading in 2021, plunged 37% in 2023. It has risen 4.7% so far this year.
The hog market is in a transition from a bear market to a bull market with consumption and prices slowly increasing, but the situation will only be clear by the end of June, Xuan said.
