China and Vietnam are liquidating their sow herds
Pork markets in China and Vietnam are unbalanced as the sector in this countries is confronted with a liquidation of sows due to the losses reported by farmers.
The information is confirmed by Jim Long, President-CEO, Genesus Inc, in a commentary released last week. "China hog producers are currently losing on average 10 RMB/kg or about 270 RMB per hog ($43 USD per head). This is leading to sow herd liquidation. China Ministry of Agriculture inventory reports a 370,000 decrease April last year to this April. We expect further rapid liquidation in the coming months if losses of current magnitude continue.
Last week we were with Genesus customers from Vietnam. Market conditions have been terrible the last 15 months. Losses per head reached $70 U.S. per head. This lead to massive sow herd liquidation with an estimate of 800,000 to 1.1 million sows going out of production (statistics are not accurate). All feed is imported. Current Vietnam prices of 39,000 Vnd/kg liveweight or 78¢ lb. U.S. liveweight is about breakeven. Vietnam had the largest financial losses of any country last year; part of this was caused when China closed the border to Vietnamese pork", mentioned Mr Long in his note.
In April, pig prices in China have plunged by 31.7% compared to the same month of 2017 to RMB10.87 ($1.70)/kg. The actual prices for Chinese pigs are considered to be at 4 years low.
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