CHINA’S pig farmers are raising fatter pigs to profit from soaring pork prices, boosting demand for key feed ingredient soymeal, and reducing some of the impact from a huge drop in the overall herd, according to analysts and industry executives.

China’s pig herd shrunk by 38 percent in August compared with a year earlier, according to data from the Ministry of Agriculture and Rural Affairs.

The herd loss is expected to push down demand for soymeal, the most common protein in pig feed, by 6 percent to 7 percent for the 2018/19 crop, said Li Qiang, chief analyst at Shanghai JC Intelligence Co., before a recovery during the next crop year.

Soymeal consumption will increase by 2.8 percent to 66.3 million tons in the 2019/20 year, according to the closely watched estimates of Shanghai JC Intelligence.

That’s partly because farmers are raising heftier pigs, to as much as 150 kg, to benefit from soaring pork prices, Li said.

Hogs are typically slaughtered in China at around 100 kg, but live hog prices have risen to as much as 33 yuan (US$4.7) per kg – a record – in some parts of the country, more than double prices of a year ago.

“For us, the cost of raising pigs is about 10 yuan per kilo, while the pork prices are at 30 in some places. Every kilo more meat you get means double profits. Everyone wants to raise fatter pigs,” said a purchasing manager at one of China’s top pig farmers.

An executive at a major feed producer said the fatter pigs were also helping to boost crush margins.

“Crush margins are not bad at all recently as demand for soymeal is quite good,” he said. “Every jin (0.5 kg) a pig puts on is an increase in soymeal demand.”

The agriculture ministry said it expected pig production capacity to hit bottom before the end of the year before stabilizing.

Listed hog companies, which account for 35 percent of China’s pig production, are expected to boost their output by 45 percent next year, Li said.(SD-Agencies)