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DTN/The Progressive Farmer reports:

China's pork industry is in the midst of major structural changes, and the outbreak of African swine fever in the hog herd is creating regional supply and demand imbalances unlike any China's seen before.

In 2015, the government embarked on an environmental plan to improve water quality in its highly populated areas. As a result, pork production shifted to northern and southwestern provinces, away from the urban centers where demand is typically the highest.

Slaughter facilities haven't followed farms' migration, and because Chinese consumers prefer fresh pork, live hogs travel long distances from the farm to the processor.

There are 18 official cases of African swine fever (ASF) in China, said Chenjun Pan, a Hong Kong-based animal protein analyst at RaboResearch's Food and Agribusiness group, at the DTN Ag Summit.

"But this number is understated," she said. "I'm sure there will be much more cases in China, but they are not reported or disclosed."

As part of its efforts to keep the disease from spreading, the Chinese government has shut down shipments of live hogs and meat across provincial borders.

The result is a supply and demand imbalance that's severely depressing pork prices in northern China, which typically consumes less pork, but now has increased production and an abundance of frozen pork. In southern China, when annual per capita consumption is nearly double that of northern China, supplies are tight and prices are nearly double what they are up north.

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