Pork prices have been rising since April 2015 and reached an historic peak in late June, which agricultural experts claim indicates the existence of a “pork cycle,” adding that domestic farmers should boost their supplies. However, domestic stocks have dropped as many farmers have either already given up or plan to stop raising pigs, as they see it as increasingly “risky” as their sector is impacted by increasing imports…Full Article: The Global Times Dec 2016

Key Points

  • In November 2016, Shuanghui (WH Group, HKG:0288) acquired Californian pork producer Clougherty Packing [including Farmer John and Saag’s Specialty Meats] for US$145 million.
  • From January to October 2016, Chinese pork imports totaled 1.39 million MTs, a ~133% year-on-year increase.
  • In April 2015, Chinese pork prices began to rise.
  • According to Chinese pork producers, the costs of raising hogs in the USA is roughly CNY 4 [~US$0.60] per kg, while the cost in China totals CNY 12 [~US$1.75] per kg. At the same time, a single sow (female hog) in the US or EU can produce 24 piglets, while in China this figure is only 16 to 17.

ChinaAg Comments

  • In October 2016, CDH Investments announced plans to reduce its stake in WH Group from 19.77% to 12.94%, and may lower it further to 8.18% at a later date
  • In August 2016, CDH Investments announced plans to sell a 10.61% stake (~US1.19 billion) in WH Group. As a result of the sale, CDH Investments stake in WH Group dropped from 30.39% to 19.77%.
  • In late April 2016, China’s average pork price totaled CNY 26.24 [~US$4.04] per kg. A stark increase from the CNY 17.88 recorded in April 2015.
  • From May 5th to July 4th 2016, Beijing will release 3,050 MTs of frozen pork from its reserves, including 50 MTs that will be sold daily to 121 supermarkets. Additionally, the government will provide subsidies to abattoirs, as well as to vendors (subsidy of up to CNY 9 or US$1.40 per kg sold).
  • From December 2015 to May 2016, China had released approximately 150,000 MTs of frozen pork from its state reserves to dampen domestic pork prices.
  • In March 2016, Beijing’s Xinfadi wholesale market noted a nearly 60% increase in pork prices versus the previous year.
  • In December 2015, China began releasing frozen pork from state reserves in 12 regions including Beijing, Zhejiang, and Shaanxi.
  • From November 2013 to August 2015, China lost 100 million boars and 10 million sows (adult female hogs). China’s pig inventory peaked in 2013.
  • In September 2013, Shuanghui (WH Group) acquired Smithfield Foods (U.S. pork producer and processor) for HK$36.7 billion (~US$4.7 billion).
  • Founded in 2002 and headquartered in Beijing, CDH Investments is a private equity firm. As of early 2016, CDH Investments had invested in China Modern Dairy (HKG:1117), WH Group (HKG:0288), and China Mengniu Dairy (HKG:2319).
  • Founded in 1958 and headquartered in Luohe, Henan Province, WH Group (formerly Shuanghui Group – HKG:0288) is a leading Chinese pork processor.

Hong Kong Trends

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