China Hog Industry Analysis and Forecast Monthly Report

By CnAgri 2016-05-26 14:08:06 Print Tel:861064402035 Email: [email protected]

Price: RMB12000(English Version) RMB7000(Chinese Version)

20160526025044472

Brief Introduction:

It will forecast for Chinese hog industry by five historical research chapters: policy environment of hog industry in China, pork demand, feedstuff support as well as cost and profit. The analysis on Chinese hog industry chain and representative enterprises will help you to acquire the most profitable investment part in Chinese hog industry.

Basic Information:

It will forecast for Chinese hog industry by five historical research chapters: policy environment of hog industry in China, pork demand, feedstuff support as well as cost and profit. The analysis on Chinese hog industry chain and representative enterprises will help you to acquire the most profitable investment part in Chinese hog industry.

Table of Contents:

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Content

1 Hog Market Price and Prosperity Analysis. 5

2 Market Analysis of Hog Industry. 7

3 Analysis and Prediction on Hog Industry Production.. 11

4 Analysis and Forecast on Import & Export of Hog and Pork. 13

5.1 Muyuan Foodstuff Co., Ltd. 16

 

BOABC Viewpoint
In Feb., China’s pig prices continue increasing and the breeding benefit keeps high continuously. The profit for breeding pigs propagated and raised by oneself is about 675yuan/head, and the profit of fattening purchased piglet is about 432yuan/head. Current inventory of reproductive sow is about 38 million head, decreasing 10.45% year on year. Hog supply will be tighter in a medium and short term, and farmers can buy piglets appropriately.
 
BOABC estimates that China’s slaughter of hog will be about 641 million heads in 2016, decreasing 4.09% year on year, pork output will reach 50.03 million tons, and the average price of hog will be 16.50yuan/kg. The detail data are as follow:
Table 1 Hog Industry Data in Feb, 2016 and Future Forecast
Index Feb-16 Jan-16 Annual Prediction
In 2016
Hog Price (yuan/kg) 18.35 17.70 16.50  
Piglet Price (yuan/kg) 34.41 31.87 29.68  
Compound Feed Price (yuan/kg) 3.07 3.08 3.11  
Ratio between Hog and Feed 5.98 5.76 5.31  
Ratio between Hog and Grain 9.51 9.08 8.40  
Profit of Sow and Hog Breeding (yuan/head) 675.49 597.97 468  
Profit of only Hog Breeding (yuan/head) 432.46 399.66 300  
Hog Inventory (1,000 heads) 376,560 373,430 395,080  
Sow Inventory (1,000 heads) 38,000 37,830 41,332  
Hog Slaughtering (1,000 heads) 51,166 53,838 641,450  
Net Import Volume of Pork (1,000 tons) 50.00 92.50 845  
Wholesale Price of Pork (yuan/kg) 24.76 23.64 22.95  
           
Data source:BOABC
 

 
1 Hog Market Price and Prosperity Analysis

1.1 Hog and Feed Market Price Change

1.1.1 Hog price continues rising in January

National average hog price is 18.35yuan/kg in January, increasing 3.69% month on month and 50.32% year on year; the price of piglet is 34.41yuan/kg, increasing 7.94% month on month and 69.57% year on year; the wholesale price of pork is 24.76yuan/kg, increasing 4.71% month on month and 35.35% year on year; the price of compound feed for growing and fattening pigs is 3.07yuan/kg, decreasing 0.16% month on month and 6.97% year on year.
 
Driven by the Spring Festival vacation, pork consumption was rising continuously in the first ten days of February, and hog price fell down from high level slowly after the Spring Festival and dropped to 18.04 yuan/kg on February 29.
Table 2 Price Trend of Hog, Piglet, Pork and Compound Feed for Growing and Fattening Pigs in Feb, 2016
unit:yuan/kg
  Hog Piglet Pork Compound Feed Price
Feb-16 18.35 34.41 24.76 3.07
MoM 3.69% 7.94% 4.71% -0.16%
YoY 50.32% 69.57% 35.35% -6.97%
Data source: MOA, BOABC
Figure 1 Price Trend of Hog, Piglet and Pork, 2012-2016
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Data source: MOA, BOABC

1.1.2 It’s predicted that hog market price will decline slightly later

The supply and demand in domestic hog market will be stable relatively in March, hog price will decline compared with that in February.
Table 3 Prediction on Price Trend of Hog, Piglet and Pork in Domestic
unit:yuan/kg
  Hog Piglet Pork
Mar-16(E) 17.65 32.89 23.88
Feb-16 18.35 34.41 24.76
Data source: BOABC

1.2 Hog breeding benefit increased slightly.

The ratio between hog and grain was 9.51 and the ratio between hog and feed was 5.98 in domestic in Feb.
(1)  Breeding link: the breeding profit of home-bred hog was 675.49yuan/head, up by 12.96% month on month; the gross breeding profit of purchased hog was 432.46yuan/head, up by 8.21% month on month.
(2)  Slaughtering link: the gross profit of slaughtering purchased hog (doesn’t slaughter hogs for other farms or farmers ) was about 56.41yuan/head, down by 25.25% month on month.
(3)  Wholesale link of pork: the gross profit was about 71.23yuan/head, up by 86.04% month on month.
(4)  Retail link of pork: the gross profit was about 288.75yuan/head, down by 6.38% month on month.
Figure 2 Monthly Profit Trend of Each Link of China’s Hog Industry, 2014-2016
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Data source: BOABC
Table 4 Profit Status of Each Link of China’s Hog Industry
unit: yuan/head
  Ratio between Hog and Grain Ratio between Hog and Feed Sow and Hog Breeding Only Hog Breeding Slaughter Wholesale Retail
Jan-16 9.08 5.76 597.97 399.66 75.46 35.80 310.91
Feb-16 9.51 5.98 675.49 432.46 56.41 71.23 288.75
Data source: BOABC
 
2 Market Analysis of Hog Industry

2.1 China’s hog slaughter will be about 640 million head in 2016, the profit of breeding keeps high continuously.

As domestic hog production and management level rises up, high inventory of reproductive sow makes the growth rate of hog supply obviously higher than that of pork demand. Hog breeding was at a stage of deficit and great deficit (the ratio between hog price and feed price is 5:1) from the beginning of 2014 to April, 2015, the ratio between hog price and feed price broke 5:1 and dropped to 4.5:1, the period of deep loss reaches a length of four months, farmers started eliminating sow gradually.
 
For farms of different size in China, propagating and breeding pig by oneself is the leading mode. As hog breeding was losing continuously, some large and medium-sized farmers exited hog breeding industry for capital chain rupture, which led to the decrease of reproductive sow inventory.      Though the profit of breeding hog went up in the second half of 2015, China’s inventory of reproductive sow showed downward trend as a whole in 2015. By December, 2015, China’s inventory of reproductive sow has reached about 37.98 million head, decreasing 12.95% year on year. In 2015, China’s annual average inventory of reproductive sow was 39.61 million head, decreasing 14.23%.
 
It’s predicted that hog supply will be tight relatively in 2016, the slaughter will be about 640 million head, hog price is about 16.5-17.0 yuan/kg. The annual average profit will be about 366yuan/head, increasing by 169yuan/head year on year; of which, the annual average gross profit of propagating and breeding pig by oneself is 465yuan/head and the gross profit of fattening purchased piglet is 266yuan/head. 
 

2.2 MOA will build another 500 livestock and poultry standardized demonstration farms in 2016 

In order to accelerate the transformation of animal husbandry production mode and improve livestock and poultry production level continuously, the MOA decides to carry out building activity of livestock and poultry breeding standardized demonstration farms. BOABC thinks that the state will take developing standardized scale breeding as an important measure of promoting modern animal husbandry.
 
The production and operation activities of scale farms which take part in the activity must abide by relevant laws and regulations including “Animal Husbandry Law”, “Animal Epidemic Prevention Law”, “Regulation on the Prevention and Control of Pollution from Large-scale Breeding of Livestock and Poultry”, etc., they must have farm registration procedure, “animal epidemic prevention qualification certificate” and complete breeding record, and no major animal epidemic disease and quality safety incident happened in last two years.
 
Hog: inventory of reproductive sow is over 300 head, annual slaughter of hog is over 5,000 head;
Dairy cattle: inventory of dairy cattle is over 300 head;
Layer: breeding scale of layer (cage) is over 10,000 cages;
Broiler: breeding volume of single-span is over 5,000 birds, annual slaughter is over 100,000 birds
Beef cattle: annual slaughter of fattened cattle is over 500 head or inventory of reproductive cow is over 50 head;
Mutton sheep: farms with ewe inventory of over 250 head in farming region or annual slaughter of over 500 mutton sheep; farms with ewe inventory of over 400 head in pasturing area or annual slaughter of over 1000 mutton sheep.

2.3 Suspension culture technology will be necessary for the upgrading and technological innovation of animal vaccine industry.

January 21, “cell virus live vaccine suspension culture production line” of Chengdu Tecbond Biological Products Co., Ltd. officially passed dynamic acceptance of GMP expert team of the MOA and became the first PRRS live vaccine suspension culture production line in domestic.
This production line will be used for producing high pathogenic PRRS heat-resisting protective agent live vaccine and will officially come into the market in February.
 
Up to December, 2015, only 11% animal biological product enterprises in domestic have built suspension culture production line with GMP certification and all focus on producing foot-and-mouth disease and avian influenza inactivated vaccine. PRRS live vaccine suspension culture production line pioneered by Chengdu Tecbond Biological Products Co., Ltd. not only provides better product choice, more marks that domestic suspension culture technology will be the necessary technology of industry innovation and upgrading.
Note: PRRS still is the major disease damaging hog breeding. The sales revenue of PRRS vaccine manufacturer was about 1.4 billion yuan in 2015. The government implements bidding policy for PRRS vaccine in 2016, but scale farms’ demand for high quality market vaccine still is strong relatively.

2.4 Hog breeding benefit still is high, but Inventory declines year on year

Now hog price is 18.66 yuan/kg and rises up continuously; the profit of pig farms for propagating and raising hog by themselves is 709.69yuan/head and the gross profit of fattening purchased piglet is 465.84yuan/head, which both increase somewhat from that in the period before the Spring Festival. According to the latest hog inventory data published by the MOA, reproductive sow inventory declines by 8.9% year on year and decreases by 0.4% month on month; hog inventory is 373 million head, decreasing by 7.7% year on year and 2.7% month on month.
 
Under the circumstance that hog breeding benefit rises up continuously, why the inventory of reproductive sow and hog still decline year on year continuously?
 
Firstly, hog breeding suffered loss continuously during the period from 2013 to April, 2015, a large number of farmers, especially small and medium-sized farmers and individual farmers exited the industry, which led to sharp reduction of reproductive sow and hog inventory;
 
Secondly, hog breeding started getting rid of loss in April and May, 2015 and realizing higher profit, however, it takes time for large and medium-sized farmers to increase reproductive sow and hog inventory greatly; under the influence of economic downturn and environmental protection pressure, the expansion of breeding industry is restricted by capital and environmental.
 
Thirdly, now piglet price is very high, for risk prediction, individual farmers are cautious about increasing inventory.
 
Reproductive sow inventory declined rapidly with year-on-year decrease rate of about 12% in 2015. In view of 13 months transmission period from reproductive sow inventory to hog slaughter, it’s predicted that domestic commercial pig supply will be tight relatively, hog price will keep high, the annual average price will be about 16.5yuan/kg, increasing by 9% year on year in 2016.

2.5 New Hope Group makes “hog farming strategic planning”, hog farming business will become the development emphasis.

Lately, New Hope Group announced reorganization plan that the Group plans to purchase 70% share of Besun Agricultural Group by means of issuing share and paying cash and build integrated safe pork industrial chain from source to end. At the same time, the board of directors passed “hog farming business strategic planning and relevant investment proposal”, the Group plans to invest 8.8 billion yuan to develop 10 million hogs by means of “company + family farm” mode in three to five years and cover 20 million hogs by means of “technical trusteeship and technical service”.
3 Analysis and Prediction on Hog Industry Production

3.1 Inventory of reproductive sow and hog both dropped slightly in January, 2016.

In Jan, 2016, China’s inventory of hog was 373.43 million head, decreasing 2.70% month on month and 9.89% year on year; the inventory of reproductive sow was 37.83 million head, decreasing 0.40% month on month and 11.26% year on year.
 
As restocked replacement gilts in previous period enter into reproductive stage gradually, BOABC estimates that the inventory of reproductive sow increased slightly in February.
Figure 3 Trend of Monthly Inventory of Hog and Reproductive Sow in China, 2012-2016
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Data source: BOABC

3.2 Slaughter quantity of hog reached a month-on-month growth of 1.20% and a year-on-year growth of 6.33% in January.

In Jan, 2016, the slaughtering volume of China’s fixed hog slaughterhouses above designated size was 23.4 million head, increasing by 1.20% month on month and decreasing by 6.33% year on year. The slaughtering volume of fixed slaughterhouses realized month-on-month growth for six successive months.
 
During the Spring Festival in February, slaughterhouses stopped work and had a holiday, at the same time, farmers haven’t many fattened hogs for slaughter. The slaughter quantity is predicted to decrease by 5% slightly.
Figure 4 Slaughter Quantity of Large-scale Designated Hog Slaughterhouses in China, 2013-2016
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Data source: BOABC
 
4 Analysis and Forecast on Import & Export of Hog and Pork

4.1 Import volume of breeding pigs was zero in January, 2016

No breeding pig was imported in domestic in January.

4.2 Live hog exports increased sharply year on year in January, 2016

As for export, China exported 21.6 thousands live hogs (≥50kg) in Jan, up by 206.74% year on year.

4.3 Changing Characteristics of Pork Trade

4.3.1 China’s import volume of pork increased by 56.03% year on year in January, 2016

China imported 97 thousand tons fresh frozen pork in January, 1.26 thousand tons more than last month, up by 56.03% year on year.

4.3.2 Change of Import & Export Price of Pork

In January, the average CIF price of imported fresh frozen pork was 1,909 USD/T, 38USD/T less than last month, down by 4.75% year on year.
Figure 5 Change of Import & Export Price of China’s Fresh Frozen Pork, 2013-2016
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Data Source: China Customs and BOABC

4.3.3 Distribution of Import and Export Countries of China’s Pork

According to the data from customs, China’s imported fresh frozen pork came from 14 countries in Jan. In terms of import volume, the top five countries successively are Germany, Spain, Denmark, the US and Canada, and their import volume respectively was 26,500 tons, 18,100 tons, 12,000 tons, 8,600 tons and 7,500 tons in Jan, accounting for 27.32%, 18.60%, 12.39%, 8.91% and 7.69% of total import volume.
 
As for export, Hong Kong was the major destination of China’s fresh frozen pork with export volume of 4,035.16 tons in January, accounting for 89% of total export volume.
 
Figure 6 Distribution of Source Countries of China’s Imported Fresh Frozen Pork in January, 2016
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Data Source: China Customs
Figure 7 Top 5 Destinations of China’s Exported Fresh Frozen Pork in January, 2016
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Data Source: China Customs

4.3.4 China’s Import and Export Enterprises of Pork

By enterprises, as table 6, 7 shows, the import volume of the top10 pork import enterprises occupied 32.01% of total import volume in January. The export volume of top 10 pork export enterprises accounted for 84.85% of total export volume.
 
5 Analysis on Main Domestic Hog Enterprises

5.1 Muyuan Foodstuff Co., Ltd.

According to 2015 annual report published by the company, it realized an operating revenue of 3.003 billion yuan, increasing by 15.31% year on year. The net profit attributable to shareholders of listed companies was 596 million yuan, increasing by 642.97% year on year.
 
The company sold 1.919 million hogs, which includes 1.71 million commercial pigs with profit of about 290yuan/head, 5400 breeding pigs and 203,100 piglets.
 
Considering that the company increases 116,000 reproductive sows in 2016, BOABC estimates that its hog slaughter will pass 2.7 million head in 2016, the profit will be about 450yuan/head, and its performance will reach 1.2 billion yuan. 
Table 5 Business data of company hog-breeding, 2015Q4
Date Hog Slaughter
(10,000 heads)
Operating income
(10,000 yuan)
Selling Price
(yuan/kg)
Net profit
  (yuan/head)
Weight
(KG)
2015Q1 40.1 49,990 11.61 -50 103.0
2015Q2 45.1 62,483 13.93 149 100.9
2015Q3 44.8 81,700 17.53 582.76 103.6
2015Q4 61.9 105,500 16.30 472.86 106.5
Data Source: Company announcement, Changjiang Securities Research Department, BOABC
Figure 8 Hog Production and Prediction of Muyuan Group
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Data Source: BOABC

5.2 TRUEIN AGRO-PASYPRAL GROUP

According to 2015 performance report published by the Group, its operating revenue and net profit respectively were 3.617 billion yuan and 230 million yuan, increasing by 105.34% and 225.43% year on year separately. 
 
The Group sold 1.7324 million hogs, which includes 817,400 commercial pigs with profit of 230yuan/head, 839,000 piglets and 18,800breeding pigs.
 
Breeding projects in Jilin and Inner Mongolia will go into operation and the Group’s hog slaughter is estimated to reach 2.40 million head in 2016.
Figure 9 Hog Production and Prediction of TRUEIN AGRO-PASYPRAL GROUP
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Data Source: BOABC
 

5.3 WENS

The company published 2015 performance, it operating revenue and net profit respectively were 48.234 billion yuan and 6.276 billion yuan. Sharp increase of performance mainly was caused by rise of hog price and expansion of slaughter scale.
 
It’s estimated that the company’s hog slaughter will reach 18 million head in 2016.
Figure 10 Hog Production and Prediction of WENS GROUP
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Data Source: BOABC

Appendix List

Appendix list 1, Import & Export Situation of Breeding Pigs in China in January, 2016

Month Import Volume
(Head)
Import Value
(USD)
Export Volume(Head) Export Value
(USD)
2016-Jan 0 0 53 15,350
Data Source: China Customs
 

Appendix list 2, China’s Live Hog Export Situation in January, 2016

Month Export Volume
(Head)
Export Value
(Million USD)
MOM YOY
2016-Jan 21,616 6.62 -91.78% 206.74%
Data Source: China Customs
 

Appendix list 3, Import & Export Volume Change of Fresh Frozen Pork in China

in January, 2016

Month Import Volume
(10,000 T)
Import Value
(Million USD)
Export Volume (T) Export Value
(Million USD)
2016-Jan 9.70 185.24 0.45 22.48
YOY 56.03% 48.60% -39.30% -35.80%
Data Source: China Customs
 

Appendix list 4, Source Countries of China’s Imported Fresh Frozen Pork in China in January, 2016

Unit:MT,US$/MT               
  2016-01 CIF Jan. to present % In Tot
Total 97,032.73 1,909.01 97,032.73 100.00
Germany 26,508.21 1,849.50 26,508.21 27.32
Spain 18,051.36 1,935.39 18,051.36 18.60
Denmark 12,022.40 2,117.98 12,022.40 12.39
United States 8,641.05 1,825.46 8,641.05 8.91
Canada 7,457.22 1,833.29 7,457.22 7.69
Netherlands 5,819.17 1,922.78 5,819.17 6.00
France 5,536.73 2,128.32 5,536.73 5.71
United Kingdom 3,689.57 1,657.64 3,689.57 3.80
Chile 2,903.80 1,706.51 2,903.80 2.99
Ireland 2,669.36 1,919.01 2,669.36 2.75
Hungary 1,383.82 1,902.15 1,383.82 1.43
Belgium 1,154.80 1,955.47 1,154.80 1.19
Brazil 1,089.04 1,976.79 1,089.04 1.12
Romania 106.20 1,460.85 106.20 0.11
Other - - - -
Data Source: China Customs
 

Appendix list 5, Destination of China’s Exported Fresh Frozen Pork in China,Jan.2016

  2016-01 FOB Jan. to present % In Tot
Total 4,543.35 4,948.39 4,543.35 100.00
Hong Kong 4,035.16 4,886.08 4,035.16 88.81
Macau 295.64 4,973.91 295.64 6.51
Kirghizia 72.00 5,500.00 72.00 1.58
Singapore 68.55 9,953.87 68.55 1.51
Mongolia 57.00 3,084.21 57.00 1.25
Malaysia 15.00 2,768.33 15.00 0.33
Other - - - -
Data Source: China Customs

Appendix list 6, Top 10 Import Enterprises of Fresh Frozen Pork in China,Jan.2016

unit: MT
Import Companies Import Volume
in Jan.
Accumulative
Market Share
Total 31,062 32.01%
Smithfield Foods (Shanghai)Co.,Ltd 6,204 6.39%
Shanghai Rongliang International Trading Co., Ltd 3,245 3.34%
Qingdao New Ocean Line International Logistics Co.,Ltd 3,121 3.22%
Tianjin Grace International Trading Co., Ltd 3,034 3.13%
Shenzhun Chuantuo Technology Co., Ltd 2,905 2.99%
Suzhou Xiangwei Food Co., Ltd 2,696 2.78%
Guangzhou Huixuan Import&Export Trade CO., Ltd 2,652 2.73%
Shanghai Zhongli Trading CO., Ltd 2,480 2.56%
Shanghai Huizhi Food CO., Ltd 2,407 2.48%
Qingdao Lianhe Youhe Food CO., Ltd 2,318 2.39%
Data Source: China Customs
 

Appendix list 7, Top 10 Export Enterprises of Fresh Frozen Pork in China,Jan.2016

unit: MT
Export Companies Export Volume
in Jan.
Accumulative
Market Share
Total   3,855 84.85%
Yunnan Yuxi Baixin Food Imp.&Exp. Co., Ltd.   1,056 23.23%
Hanshou Huale Agriculture Development Co., Ltd.      789 17.37%
Haifeng Haichong Animal Husbandry Development Co., Ltd.      478 10.53%
Topin Group      470 10.35%
Huidong Dongjin Fresh meat Co., Ltd.      302 6.64%
Sanwang Industry Co., Ltd.      202 4.44%
Shenzhen Agri-Pastoral Enterprises Co., Ltd.      177 3.90%
Shenzhen Huida Trading Development Co., Ltd.      150 3.30%
Dongkou Frozen Meat Co., Ltd.      126 2.77%
Chongqing Wanzhou Natural Food Co., Ltd.      105 2.31%
Data Source: China Customs
 


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