China wants slimmer pigs

Chinese farmers and small firms have increasingly bought market-ready pigs from larger breeders and fattened them in a bet on higher prices, but the government is cracking down on the speculative practice to slim down hogs and stabilise the market, Reuters said.

For small breeders, "refattening" or buying adult hogs from big producers and feeding them for an extra few months until they put on an extra 40-50kg is a way to gamble on pork prices rising.

But analysts say regulators are concerned the bets fuel big price swings and squander feed, in the latter case clashing with a national push to cut grain use in livestock, especially as the trade war with the US underscores a long-standing goal to reduce dependence on food imports.

"It can lead to short-term shortages followed by a glut, driving big price swings and unsettling the market," said Pan Chenjun, senior animal protein analyst at Rabobank.

"The government seems intent on stabilising pork prices, which remain weak, while protecting small farmers from losses and curbing speculative behaviour," Pan added.

Muyuan Foods, China's top pig breeder, told state-run Beijing News in late May that it had halted sales to refatteners, after rumours of a policy meeting targeting the practice boosted pig firm stocks.

A crackdown is already underway, according to a source directly familiar with the matter and two briefed by others involved, one of whom said Guangdong province in southern China is a particularly strict enforcer.

The National Development and Reform Commission and Muyuan did not respond to Reuters' requests for comment.

China, the world's biggest pork consumer, is grappling with weak demand and oversupply that have eroded margins. Cash hog prices have hovered around 14 yuan per kg since February, down from a peak of 21 yuan last August, according to MySteel data.