TOKYO -- Corn prices have risen substantially over the past year as China's pork industry rebounds from an outbreak of African swine fever that had forced farmers to cull much of their pig herds.
Corn futures on the Chicago Board of Trade recently hovered above $5 a bushel. While the price is down over 30% from a peak in early May, when unusual weather in the U.S. had raised concerns about a poor harvest, it is still about 30% higher than a year earlier.
The rise since last year reflects a jump in demand for feed corn in China, the world's top producer and consumer of pork. But higher prices put a heavier burden on farmers and meat producers around the world, particularly in import-dependent markets like Japan, which has more than 70% of its feed shipped in from abroad.
The size of China's swine herds -- which had numbered more than 400 million before African swine fever began sweeping through the country in 2018 -- had fallen dramatically as the industry was forced to cull pigs to curb the spread of the disease.
The much-reduced supply drove the price of pork to a 10-year high of 58.9 yuan ($9.15 at current rates) per kilogram in February 2020, according to the Ministry of Agriculture and Rural Affairs.
President Xi Jinping's government -- seeing a risk of public anger if it did not act to bring down the cost of a dinner-table staple -- responded with support for pork producers, including financial assistance to cover the cost of raising pigs.
Now herds have largely returned to pre-swine-fever numbers, and pork prices have been heading downward since early this year. The 23.2 yuan price marked in September was "down to its levels before swine fever," a representative at a major trading house said.
Prices are getting closer to the normal price of 15 to 20 yuan from around 2000 to 2018, according to Akio Shibata, president of Japan's Natural Resource Research Institute.
The recovery of the pig population sped up the shakeup in the swine industry. When micro to midsize players were driven out, it made room for bigger competitors to expand.
Top names like Wens Foodstuff Group and Muyuan Foods announced large-scale breeding plans to expand market share. Large businesses have the capital for disease prevention programs.
Unlike small pig farmers, some of whom are thought to use leftover food as feed, big breeders use corn and soy meal to fatten pigs. The larger number of pigs drove up demand for corn.
Chinese imports of corn grew 3.7 times on the year in the 2020-21 year, U.S. Department of Agriculture data shows, making the country the top importer. Chinese customs figures show the import volume nearly quadrupling on the year during the January-August period.
Corn demand appears resilient for at least the medium term. China, the world's second-leading grower of the crop, has covered most of its domestic consumption.
China is reportedly aiming for 95% self-sufficiency in corn. But Arlan Suderman, chief commodities economist at StoneX Group, has estimated the real-world ceiling at 85%.
An increase in Chinese imports will put upward pressure on international prices, which will further impact feed sellers and farmers in neighboring countries.
The U.S. and China resumed cabinet-level trade meetings online earlier this month. They decided to discuss outstanding issues based on the "phase one" deal of early 2020, according to a readout from the Office of the U.S. Trade Representative. China had pledged to expand imports of American agricultural goods.
Assuming that Sino-American relations do not crumble dramatically, it's conceivable that Chinese imports of U.S. grain and other farm products will grow steadily, said Ruan Wei, chief researcher at the Tokyo-based Norinchukin Research Institute.