Head of Consumers Equity Research
June 4 2019
African Swine Flu (ASF), a deadly disease for pigs, has spread rapidly across China over the past six months. It has a 90% fatality rate; there is no known vaccine. According to the Economist, it will take years for the disease to be controlled.
The Chinese authorities have said that only 1mn of the 500mn pig herd have been culled, but anecdotal reports suggest the cull rate in some provinces could be as high as 20%. Rabobank, a Dutch bank, estimates that more that 150mn pigs have been affected by ASF – almost one-third of the herd.
The crisis has driven pork prices in China up by 40% yoy and has also increased pork and chicken prices in Thailand – the core market of Southeast Asian meat processor Charoen Pokphand Foods (CPF TB), which we cover – by 8% and 9% ytd, respectively.
Moreover, ASF has led to an upsurge in chicken prices in China, by over 50% yoy, as consumers look for cheaper and safer forms of protein.
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