October 28, 2019 / 9:43 AM / a month ago

China's egg futures hit three-year high as pork prices surge

SHANGHAI, Oct 28 (Reuters) - Egg futures on China’s Dalian Commodity Exchange rose to their highest in more than three years on Monday, in a move analysts tied to sharp gains in pork prices after disease devastated the country’s hog herd.

The most-actively traded egg contract jumped nearly 4% earlier in the day to 4,925 yuan ($697.44) a tonne, the highest since July 2016. It was last up 2.95% at 4,884 yuan.

Egg prices also rose 5.4% last week, their biggest weekly gain in two and a half months.

Analysts attributed the rise to soaring protein prices, after African swine fever reduced China’s pig herd - the world’s largest - by at least 40%.

“I think it’s a play on protein price inflation. All protein prices are going up due to African swine fever, but it’s hard to play that directly,” said Darin Friedrichs, senior commodity analyst in Asia at brokerage INTL FCStone, as there are no futures contracts in China for pork or hogs.

“Buying egg futures is the next best thing,” he said.

Pork prices in China surged towards $8 per kilo last week as colder weather increased demand, with retail pork prices in mid-October showing their biggest weekly jump since at least 2016. PORK-CN-TOT-D

“The main reason egg prices are pushed higher is pork prices are heavily inflated. October prices for live pigs and pork showed sharp increases,” said Jim Huang, chief executive of consultancy China-America Commodity Data Analytics.

Bullish traders have also pushed the share prices of listed poultry and pig producing companies such as Shandong Yisheng Livestock and Poultry and Muyuan Foods Co Ltd to their limits, added Huang, with money spilling over into the futures market.

“Also, right now it is low demand for eggs, so people are really confident that if egg prices are still high now, what more when it is high season?”

$1 = 7.0615 Chinese yuan renminbi Reporting by Emily Chow; Editing by Mark Potter

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