August 21, 2018 / 4:09 AM / 9 months ago

Major Chinese pig farmer says farms idle as rising feed costs hit profit

BEIJING, Aug 21 (Reuters) - Beijing Dabeinong Technology said on Monday a big portion of its newly expanded pig farming capacity is idle, increasing production costs and pushing one of China’s top pig farmers and feedmakers into its first loss in years.

It also blamed weak second-quarter results on the rising cost of feed ingredients, including soymeal.

The comments underscore concerns across China’s hog industry that the world’s largest pig herd has expanded too fast in recent years, creating a glut as demand growth has stagnated.

The statement did not mention the escalating trade spat between Washington and Beijing, but the results also highlight the impact of the dispute as import duties on U.S. soybean imports curb supplies and drive up prices of animal feed.

Soymeal futures hit a record high in April as the trade row escalated, and last week, soymeal prices were just 1 yuan shy of that peak.

In the second quarter, the company had a pre-tax loss of 76.9 million yuan ($11.2 million), according to Reuters calculations based on its first-half results. That compares with a profit of 386.3 million yuan in the same three months last year and 227.4 million yuan in the first quarter.

The April-June result was Dabeinong Technology’s first quarterly loss on records going back to 2013.

The feed business, the company’s biggest revenue earner, saw its net profit fall in the first half due to rising costs of feed materials, it said.

The report covered a period before China confirmed its first case of African swine fever (ASF) in Liaoning province.

Beijing reported three ASF cases in one month, stoking concerns about demand for pork and pushing down shares of major hog producers.

$1 = 6.8740 Chinese yuan Reporting by Hallie Gu and Josephine Mason; Editing by Tom Hogue

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