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The $250 Billion Hog Equity Market, By Jim Huang Futures Market Executive


  • China’s financial markets reopened Feb 18 after a week-long Spring Festival holiday;

  • DCE Hog Futures rallied 6% with trading volume more than double on Friday;

  • “Hog Concept” is a red-hot investment theme in China’s stock market;

  • l There are 31 publicly listed hog firms with market capitalization of 1.6 trillion;

  • The Crowning of Wen’s Group as China’s No. 1 hog producer, and its falling from grace.

[Greene County IL, Feb 20] – China’s financial markets resumed Thursday February 18 in the Year of the Ox after a week-long close in observation of Lunar Chinese New Year. In China, Spring Festival is an official holiday where all workers are entitled to seven days of annual vacation time.

DCE hog futures traded 18,942 lots Friday, 170% more than the previous day volume. The front month September contract LH2109 jumped 6.1% and closed at 28,330. November and January contracts gained 6.0% and 5.8%, respectively. Hog futures Open Interest grew 1,811, or 6.7% to 27,175 contracts. (Notes: DCE hog futures is based on 16 metric tons of live hogs. Price unit is RMB yuan per metric ton, US$1≈6.5 yuan.)

As of yesterday, hog contracts regained all the ground they had lost in initial trading sessions. SEP is now 1,520 points higher than the Jan. 8 close of 26,810 when the contract debuted. NOV and JAN closings of 27,030 and 26,400 are up 8.4% and 9.4%, respectively.

Over the past month, hog futures have been trending up with the resurfacing of African Swine Fever (ASF) cases in China. As cash hog prices dropped in January unexpectedly, ahead of the Chinese New Year peak season, farmers accelerated the sales of hogs and sows. The latter would result in fewer piglet births in the coming months, and reduced market hog production this year. The compound effect gave strong support to futures prices.

Although China’s total hog supply may come under original forecasts, stock market indicates that large producers would grow hog inventory rapidly and gain market shares at the expense of smaller farmers. With more hog sales at a higher expected price, the 31 hog firms listed in China’s stock market rallied 2.2% Friday, and reached a market capitalization of RMB 1.5 trillion, equivalent to US$246 billion.

Seven stocks triggered the 10% market up limit for individual stocks, including producers Zhengbang, Tech Bank, TRS, and Yisheng. New Hope group, China’s biggest feed supplier and animal health companies TECCN and Aonong also jumped 10%.

(Voir article complet)

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Photo : provenant de Pexels

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