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China pig price seen near record as floods stir disease concern

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China's pig prices may climb to near a record after floods drowned animals and prompted concerns about possible disease outbreaks in the world's biggest pork producer and consumer, according to analysts.

[BEIJING] China's pig prices may climb to near a record after floods drowned animals and prompted concerns about possible disease outbreaks in the world's biggest pork producer and consumer, according to analysts.

Farmers are increasing slaughter, including animals that aren't fat enough, after floods in China's central and south, said Xiong Kuan, an analyst with Beijing Orient Agri-business Consultant Ltd.

Pig prices may increase from September and near the record 21 yuan (S$4.27) per kilogram reached in May, he said. Prices were at 18.34 yuan on Wednesday.

China will import a record amount of pork this year to cover a supply gap amid declining domestic production, Rabobank International said this month. Output fell 3.9 per cent in the first half of this year and the five provinces hardest hit by flooding produce about one third of the country's pork, according to the National Bureau of Statistics.

About 10,000 hogs drowned at a village in Hubei province, news portal Sina.com reported on Tuesday. Thousands of pigs were stranded in floodwaters at a village in Anhui this month, according to Southcn.com.

Flooding raises the risk of disease, according to Feng Yonghui, chief analyst at researcher Soozhu.com.

"Under such extreme humid and high temperature weather, improper treatment of corpses could cause widespread disease after flood," he said.

Domestic pig prices surged 51 per cent this year, according to data from Shanghai JC Intelligence Co.

Wholesale pork prices climbed 11 per cent in 2016 and reached a record 26.74 yuan a kilogram in June.

Imports will surge 30 per cent to more than 2 million tons of pork and pork variety meat this year as output declines 5 per cent amid low hog and sow inventory, according to Rabobank.

Pork consumption increased 19 per cent in the past decade, according to the US Department of Agriculture.

Companies are expanding capacity, seeking to tap into increasing pork demand and after smaller producers exited the market.

Cofco Meat Holdings Ltd plans to expand its production capacity to 5.5 million head in 2020 from 3.5 million, according to a document submitted to Hong Kong's stock exchange.

New Hope Liuhe Co is investing about 6 billion yuan to expand its business by 10 million pigs in the next three to five years, it said in a report this month.

Output may also rebound as China completes the shutdown and relocation of pig farms away from major rivers and cities, said Ma Chuang, secretary general with Chinese Association of Animal Science and Veterinary Medicine.

The closures are part of measures to address food safety concerns and the adverse impacts of farming on the environment. Thousands of dead pigs discovered in Shanghai's Huangpu river in 2013 prompted water quality tests.

BLOOMBERG