China lowers 2021-2025 sow herd target, seeks to stabilize pork prices

In an interim plan for hog breeding capacity, the Ministry of Agriculture and Rural Affairs said the target for the sow herd was now around 41 million head for 2021-2025 and should be no lower than 37 million head. | Reuters photo

Sept 23 (Reuters) - China's agriculture ministry lowered its sow herd inventory target for the Five-Year Plan just started, as the world's top pork producer aims to ensure supply and stabilize prices.

In an interim plan for hog breeding capacity, the Ministry of Agriculture and Rural Affairs said the target for the sow herd was now around 41 million head for 2021-2025 and should be no lower than 37 million head.

Previous guidelines jointly issued by the agriculture ministry, state planner and other authorities last month set the target at between 40 million to 43 million head.

"As long as the inventory of breeding sows is kept within a reasonable range, piglet production will be guaranteed (and) hog market supply and pork prices will be kept relatively stable," the ministry said in a statement.

China's pork prices have dived in recent months, pushing the country's hog farmers into the red, amid a supply glut due to efforts to rapidly rebuild its breeding herd after an epidemic of African swine fever.

China had 45.6 million sows by the end of June, some 2 percent more than the end of 2017, the year before swine fever hit, though the sow herd contracted slightly in July.

Shares in leading producers, under significant pressure in recent months, jumped on the news. Muyuan Foods and Jiangxi Zhengbang both closed up more than 2 percent, while New Hope Liuhe surged 6 percent.

Pan Chenjun, senior analyst at Rabobank, said the market overreacted. "It's a fragmented industry, it's not that easy to change the sow structure overnight."

In Thursday's statement, the agriculture ministry said breeding sow herd stocks would be categorized by three zones - to help authorities bring stocks to within normal levels.

The "green zone" would show the sow herd inventory fluctuating within a normal range and would not require any action, though it would be monitored regularly.

Authorities would need to act if the inventory entered the "yellow zone", indicating a sharp fluctuation, or the "red zone", signifying "excessive fluctuation" of more than 10 percent either side of the normal level.

China will keep records on farms that send more than 500 pigs to slaughter per year, the ministry said.

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