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China’s new pig farmers aim to ride out boom-bust cycle

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November 2, 2021

By Dominique Patton

CHONGQING, China (Reuters) – China’s huge hog sector is struggling with excess production after millions of small, often first-time, pig farmers entered the industry to capitalise on record profits during a swine-fever related shortage.

Now, even as prices hover below the cost of production and the government urges them to cull their herds, many of the newcomers are reluctant to give up, dimming hopes for the market returning to balance.

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“We’ve been losing 400,000 yuan ($62,500) a month since July. But we made a profit last year so we’re going to hold on,” said Wu Zhanhang, a farmer based in central Henan, China’s top pig-producing province.

Wu, like many others, entered pig farming for the first time in 2019, after China’s top leadership called for an urgent recovery following a nationwide outbreak of the deadly African swine fever virus that halved the country’s 447 million-strong herd.

Profits initially boomed in line with higher prices for pork, the country’s favourite meat. But surging output and COVID-linked demand interruptions have driven down prices by 70% this year, causing heavy producer losses over the past three months.

Wu, who has a trading business selling veterinary products, spent 6 million yuan ($935,000) on a new farm where he fattens up about 5,000 pigs at a time.

Last year he was making as much as 3,000 yuan ($470) a hog, three times the best money seen in prior years. This year, after prices plunged, he has been selling fully grown fattened pigs for less than he bought them as weaned piglets.

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(For graphic on Profits for farmers in China’s top pig-producing province: https://graphics.reuters.com/CHINA-SWINEFEVER/HOGS/movanjeblpa/chart.png)

SUPER-CYCLE

The dramatic turn in fortunes caught out even the biggest hog companies and has caused havoc across the sector and its suppliers.

Listed hog producers reported billions of yuan in losses in the third quarter.

Many breeders are struggling to pay their suppliers, said a feed company manager, and are are even cutting out regular feed ingredients.

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All have slowed, or even stopped planned expansions. Tech-bank Food Co Ltd is leasing out some of its newly built farms and halted construction of others, while delaying payment of management salaries, it told investors.

Weak demand is also a factor, said Dan Wang, chief economist at Hang Seng Bank in Shanghai. The massive build-out of new breeding farms has come at a time when consumer demand for pork still lags ‘normal’ levels because of repeated flare-ups of COVID-19 that curb eating out.

However, industry efforts to turn things around are being undermined by an army of small producers still gambling on a return of higher prices, say market watchers.

More than 2 million small farmers entered the sector last year, according to official data, joining an estimated 20 million small-scale pig producers, while some 16,000 new large-scale farms also began operating.

“The current market is caused by millions of farmers’ speculative behaviour towards the African swine fever-related price expectation,” said Pan Chenjun, senior analyst at Rabobank.

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SOW STOCKS

With a bigger breeding herd now than before African swine fever struck, government officials last month issued a rare instruction to farmers to eliminate their less efficient sows.

Large players have been getting rid of sows for several months and some others are following suit.

“We have close to 1,000 sows, we’re going to cull half. If you keep them, you lose more,” said the manager of a small breeding farm in northern Hebei province, who declined to be identified.

Some farmers, however, are still hoping for a recovery. Wu, the Henan farmer, says he has switched to cheaper feed rations and can ride out the heavy losses until the New Year.

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A modest price rally in October also revived enthusiasm among farmers for breeding, said analysts, and will likely serve to extend the period of low prices.

Some market watchers say it could take another disease outbreak to clean up the market, with African swine fever still infecting farms and other common diseases often worse during the winter.

“At the end of the year or early next year there’ll definitely be a large disease outbreak,” Wang Chuduan, professor at China Agricultural University, told an industry meeting in Chongqing. “It will speed up the elimination of pigs and then a new market will start next year.”

($1 = 6.4021 Chinese yuan renminbi)

(Reporting by Dominique Patton; editing by Richard Pullin)

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Tesla sold 52,859 China-made vehicles in November – CPCA

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December 8, 2021

BEIJING (Reuters) – U.S. electric vehicle maker Tesla Inc sold 52,859 China-made vehicles in November, including 21,127 for export, the China Passenger Car Association (CPCA) said on Wednesday.

Tesla, which is making Model 3 sedans and Model Y sport-utility vehicles in Shanghai, sold 54,391 China-made vehicles in October, including 40,666 that were exported.

Chinese EV makers Nio Inc 10,878 cars last month, a monthly record high, and Xpeng Inc delivered 15,613 vehicles. Volkswagen AG said it sold over 14,000 ID. series EVs in China in November.

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CPCA said passenger car sales in November in China totalled 1.85 million, down 12.5% from a year earlier.

(Reporting by Sophie Yu, Brenda Goh; editing by Jason Neely)

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Renault Zoe goes from hero to zero in European safety agency rating

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December 8, 2021

By Nick Carey

LONDON (Reuters) – French carmaker Renault on Wednesday received a blow for its popular Zoe electric model, as the European New Car Assessment Programme (NCAP) gave it a zero-star safety rating in tests that are standards for Europe.

The carmaker, which is cutting costs and working to turn around its performance after overstretching itself over years of ambitious global expansion, also received a one-star rating for its electric Dacia Spring model.

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Euro NCAP said the latest Zoe had a worse seat-mounted side airbag than earlier versions. Euro NCAP noted the Renault Laguna had been the first car ever to receive a five-star rating in 2001.

“Renault was once synonymous with safety,” Euro NCAP secretary general Michiel van Ratingen said in a statement. “But these disappointing results for the ZOE and the Dacia Spring show that safety has now become collateral damage in the group’s transition to electric cars.”

In the year through October, the Zoe was the third top-selling fully-electric car in Europe, behind Tesla’s Model 3 in top place and Volkswagen’s ID.3.

In a press release titled “Hero to Zero,” UK insurance group Thatcham Research noted the Zoe had initially received a five-star rating back in 2013.

“It’s a shame to see Renault threaten a safety pedigree built from the inception of the rating,” said Matthew Avery, Thatcham’s chief research strategy officer and a Euro NCAP board member.

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Eleven cars received ratings in Euro NCAP’s final round of tests for 2021, which did not include Tesla models.

A number of other vehicles received five-star ratings, including BMW’s electric iX, Daimler’s electric Mercedes-Benz EQS, Nissan’s Qashqai and Volkswagen’s VW Caddy.

(Reporting By Nick Carey; Editing by Bernadette Baum)

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Weibo shares close down 7.2% in Hong Kong debut

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December 8, 2021

By Scott Murdoch

HONG KONG (Reuters) -Chinese social media giant Weibo Corp’s shares closed 7.2% below their issue price in Hong Kong on Wednesday, as it became the latest U.S.-listed China stock to seek out a secondary listing closer to home.

The Hong Kong debut was in line with a fall in Weibo’s primary listing in New York after a torrid week for U.S.-listed China shares, which are facing greater U.S. regulatory scrutiny and also under pressure from Chinese authorities.

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Weibo, which raised $385 million for its Hong Kong listing, opened at $256.20 and closed at HK$253.2 after a volatile debut session.

The stock had been priced at HK$272.80 each in its secondary listing in which 11 million shares were sold.

“For Weibo, it’s a matter of timing. The Hong Kong market had started to rebound this week and now we are seeing some softness emerging in the market,” said Louis Tse, Wealthy Securities director in Hong Kong.

Weibo’s fall came as Hong Kong’s Hang Seng Index closed Wednesday up 0.06% while the Tech Index was 0.03% higher.

Some major stocks such as Alibaba Group Holdings, down 4.35%, were off sharply as sentiment towards tech majors remains fragile.

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“The listing market in Hong Kong is very lukewarm right now,” said Dickie Wong, Kingston Securities executive director.

“Plus, there is regulatory pressure from the (U.S. Securities and Exchange Commission) on Chinese companies to disclose basically everything within three years.

“So there is a major trend that most of the U.S.-listed Chinese companies will seek secondary or dual primary in Hong Kong so they can exit the U.S. market if they need to.”

Ride-hailing giant Didi Global decided last week to delist from New York https://www.reuters.com/technology/didi-global-start-work-delisting-new-york-pursue-ipo-hong-kong-2021-12-03, succumbing to pressure from Chinese regulators concerned about data security and denting sentiment toward Chinese stocks.

Hong Kong and China’s mainland STAR Market have attracted $15.2 billion worth of secondary listings from U.S. listed Chinese companies so far this year, according to Refinitiv data.

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“The moves are probably based on the increasing recognition that the U.S.-China decoupling will not stop and will proceed steadily,” said LightStream Research analyst Mio Kato, who publishes on Smartkarma.

“I would expect a continuous flow of listings from New York to Hong Kong over the next year or two.”

The U.S administration is progressing plans to delist Chinese companies if they do not meet the country’s auditing rules, which could affect more than 200 companies.

Chinese companies https://www.reuters.com/business/us-sec-mandates-foreign-companies-spell-out-ownership-structure-disclose-2021-12-02 that list on U.S. stock exchanges must disclose whether they are owned or controlled by a government entity, and provide evidence of their auditing inspections, the Securities and Exchange Commission (SEC) said last week.

(Reporting by Scott Murdoch and Donny Kwok; editing by Richard Pullin and Louise Heavens)

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