BEIJING (DTN) -- China's Ministry of Agriculture said last week that African swine fever (ASF) was tentatively under control. But the ag industry believes that the situation is much worse than what the government reported, and the impact of ASF on China's hog industry may last for a long time.
In a national video conference, Ministry of Agriculture Vice Secretary Kangzhen Yu declared tentative control of the virus. He also mentioned that the impact of the virus will last a long time and the government will work even harder to control the situation, and in the meantime, will work to support hog production and increase pork supplies.
African swine fever broke out in China almost eight months ago. The first case was found in Liaoning Province, in northeast China, when 47 pigs died. Since then, more than 113 cases have been reported in most hog production areas. However, recently, the number of cases has decreased each month, with only two cases in March, compared to 21 cases in December and 25 cases in November last year.
A recent survey by a local company in Qinhuangdao City, Hebei Province, showed that hog farms with more than 200 sows in that county were all infected; about half of the sows in the county were culled. The survey also found that the number of sows in Hunan and Hubei Province, one of the most important hog production areas in south China, is 20 to 30% fewer than the same time last year. Breakouts of ASF keep occurring in the south China region, and more hogs and sows will be culled. This is much worse than what the government and media has reported.
"Yes, we were affected," said Sixu Li, manager of a hog farm in Hebei Province. "The local government did not report our case."
Market rumors said that there was a new outbreak in northeast China again last week.
PORK PRICE HIGHER
Pork prices have been creeping higher since February, as trading companies realized that there is less stock of hogs and market supply will become even less.
"(The) pork price increased to 14.55 Yuan (USD$2.17) per kilogram last week, compared to 12.11 Yuan (USD$1.80) two or three weeks ago -- (price) increased 20% in two weeks," said Jun Wang from China Agricultural University.
"There are several reasons impacting the hog price," Wang explained. "Of course, less hogs available to the market is the key reason. After many hogs were culled in the country in the past months, hog stocks decreased about 30%. In the meantime, many regions are blocked after African swine (fever) was found. Hogs in that region cannot be shipped to consumption region. As the profit of hog farms increases with pork price change, some farmers want to keep the hogs in stock for a little longer time to increase the weight of each hog, and wait for an even better price in the future."
IMPACT ON SOYBEAN DEMAND
"Feed demand decreased 30 to 40% in many areas (from normal)," said Dongping Lu, a purchasing manager for Yangxiang Stock Co. "Some of the feed companies have to shut down."
Some feed companies in Henan Province had about 10,000 metric tons of feed at the end of last year; now, they can only sell 500 tons. Some of them have to shut down because they cannot cover the operation cost, added Lu.
"This is probably not the worst time yet," said Lu. "We are not only facing a low stock of hogs, but also less piglets available to build up stocks, because there are less sows in the market" because they were culled.
Soybean meal price is at its lowest point in China because there is less demand. The May soybean meal contract price was 3,019 Yuan per ton (USD$449.78) on the Dalian Commodity Exchange at the end of March in 2018, but the same contract this year dipped to 2,508 Yuan (USD$373.65). "Do not forget, China imports much less soybeans this year, because of the trade relations between the U.S. and China," said Wang.
Though the government report sounds optimistic about ASF control, the real situation is unknown to the public as any non-authorized testing and reporting of swine fever is illegal.
Market rumors said that China may import 300,000 mt of U.S. pork later this year. This may help supply the China pork market.
Copyright 2019 DTN/The Progressive Farmer. All rights reserved.