China’s hog prices have fallen by more than 30 percent since December as large production has outweighed demand. Data from China’s Ministry of Agriculture (MOA) show that prices continued to drift lower at the end of April – averaging about $0.80 per pound, which is down 12.5 percent from a year ago. U.S. hog prices have exceeded China’s prices for nearly two months, an inversion that has not occurred since a brief period in May 2010, as the supply situation in China has been in dramatic contrast to that of North America and other key Asian markets. The Chinese government has recently announced a second round of carcass buying for the strategic reserves in an effort to bolster prices, but the 88,000 metric tons (mt) that will be procured in this round will probably have a limited impact on the market.

China’s hog:corn ratio is at 4.6:1, significantly lower than the profitability level of 6:1. China’s piglet prices have been in slow decline since September, and were also down 12.5 percent year-over-year at the end of April. Despite the negative price situation, China’s pork imports have held up relatively well. China/Hong Kong pork/pork variety meat imports in March totaled 138,843 mt, down 8 percent from last year but up 32 percent from the seasonal low in February. First-quarter imports were 379,534 mt, down 10 percent from last year. Somewhat surprisingly given the relative price situation, U.S. exports to China/Hong Kong in March totaled at 41,294 mt, up 49 percent from a year ago and 10 percent higher than in February.

There are glimmers of hope that China’s hog market is finally bottoming, as some analysts estimate that prices stabilized and even increased slightly following the early May Labor Day holiday. Others in the industry project that further sow liquidation will be necessary to bring the market into alignment.

NOTE: Import totals exclude Hong Kong imports from China and Hong Kong re-exports.