Pork Producer Smithfield Says China Exports Soared in First HalfBy
Chinese farmers are culling as many as 10 million sows
Hog futures post biggest two-day gain since October '09
Smithfield Foods Inc., the world’s largest pork producer, increased shipments to China by 45 percent in the first half of this year, Chief Financial Officer Kenneth Sullivan said.
The company, owned by China’s WH Group Ltd., saw exports climb from a year earlier as the country culls as many as 10 million sows, Sullivan said Tuesday on a conference call with investors.
Millions of small Chinese producers exited the industry after expansion from 2011 to 2013 eroded profits. Domestic wholesale prices are surging for the world’s top pork consumer just as the economy shows signs of slowing. China will increase imports by 45 percent this year, according to Rabobank International.
“We certainly are seeing demand from China,” Sullivan said. The number of sows being culled is “more than equivalent of the entire U.S. industry,” he said.
On Tuesday, hog prices on the Chicago Mercantile Exchange capped the biggest two-day gain since Oct. 2009 on prospects for higher pork demand from China.
Futures for Oct. Settlement rose 2.5 percent to close at 67.5 cents a pound on Tuesday. They jumped 7.4 percent in two days.
The priced surged by the exchange limit of 3 cents, or 4.8 percent, on Monday. Large commercial buyers probably took long positions, Dennis Smith, a senior account executive at Archer Financial Services in Chicago, said in a telephone interview.
Futures have dropped 17 percent this year.
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