(Yicai) Dec. 22 -- The outlook for China’s hog farmers will stay bleak in the first three months next year as consumption recovers slowly in the wake of the Covid-19 pandemic, and the market continues to be flooded with swine, industry insiders told Yicai.

There will be more fertile sows in the first quarter next year than a year ago, which means that the downturn will continue, and hog breeders will rack up more losses than they did this year, an agricultural analyst told Yicai.

The large number of fertile sows, and the long time it takes to reduce this number, are the main reasons why the hog market is unable to get out of the doldrums. China had 42.1 million fertile sows as of the end of October, a dip of 0.7 percent from September but a gain of 3.9 percent from a year earlier and still above the normal level of 41 million, according to industry data.

Live hog prices remain low as target slaughter weights are met more easily and breeding efficiency improves, the analyst said. The number of live pigs up for sale surged 15.7 percent in November from a year earlier and jumped 8.6 percent from October to 13.8 million. And in the first 11 months, the number of swine supplied by 18 listed hog breeders jumped 16.5 percent year on year to 137.3 million.

More Debt

Many pig breeders expanded capacity when prices were high. Now that prices are sinking, the bigger their production, the heavier their losses. Some owners are even trying to sell out.

The gearing ratio, or debt-to-equity ratio, of 13 listed hog farms was higher than 60 percent at the end of September, and at some firms it even topped 85 percent, according to statistics from financial data cruncher Wind Information. The average gearing ratio of all listed pig breeders was 62.2 percent, much higher than last year’s 59.7 percent and 2021’s 54.8 percent.

This year's main goal is to cut production costs, manage cash flow, optimize debt structure and reduce the gearing ratio, industry leaders, such as Muyuan Foods and Wens Foodstuff Group, said earlier.

Editors: Tang Shihua, Kim Taylor