(Yicai Global) Jan. 8 -- China’s first live-animal futures debuted on the Dalian Commodity Exchange today, with all three of the active contracts for hogs falling more than 10 percent.

Live hogs for September delivery, the most actively traded contract, opened 3.85 percent below the listing price of CNY30,680 (USD4,742) a ton and closed 12.6 percent lower at CNY26,810, after touching as low as CNY26,385. Turnover totaled CNY41.2 billion (USD6.4 billion).

Referring to the sharp decline, industry insiders told Yicai Global that the listing price was largely based on then-current spot prices. They said China’s pig production is rebounding while the contract delivery period is at least nine months away, by which time supply will be greater than now, so a price slump on the first day of trading is not unreasonable, they said.

The insiders expect live hog spot prices to fall to around CNY25,000 a ton or even lower in the second half of this year as capacity recovers.

The recovery in pig herds will be the decisive factor in price fluctuations and may become the key reason for falling prices for some time to come, Zhao Guangyu, an agricultural products analyst at Nanhua Futures, told Yicai Global.

China is the world’s largest hog producer and consumer, accounting for over 50 percent of pork production and consumption, but has long been troubled by the so-called pig cycle (with larger fluctuations in supply and demand).

Pig prices went through a cycle of big gains after the summer of 2019, boosted by tighter supplies after African swine fever devastated herds. Prices began to fall from last August though there has been some recovery in spot prices since December.

Editors: Tang Shihua, Peter Thomas