• What’s new?

Thailand is employing strict measures to control ASF

There have been several reported cases of ASF (African Swine Fever) outbreak in Cambodia, Laos and Myanmar. The Department of Livestock Development is monitoring high-risk areas in Chiang Rai and Chiang Mai to prevent an outbreak in Thailand. There is also news the department plans to cull 150,000 pigs in Chiang Rai province, which prompted some farmers to quickly sell their livestock to avoid from potentially being infected and culled. This has caused domestic pork prices to drop.

• Analysis

In the worst case, swine prices could drop by 20-30% but would rise sharply again after 3-4 months due to supply shortage

If there is an ASF outbreak in Thailand, we expect swine prices to drop by 20-30% as farmers in (not affected) areas might want to quickly sell their livestock to prevent them from potentially being infected and culled. But after about 3-4 months, swine prices should rise sharply because of shortage supply, coupled with higher demand from Cambodia which has reported ASF cases recently.

• Action/ Recommendation

Maintain BUY rating with Bt33.50 TP

The ASF outbreak will affect the swine market in the near-term but would support swine prices in the next period as pork product suppliers seek to buy swine from farmers in unaffected areas to address the supply shortage.

This will benefit CPF in the next period as their pig farm is a closed-system, which means low risk of the livestock contracting ASF. Meanwhile, there is limited new supply from small breeders. We expect swine prices to recover within a few months and continue to rise up to 2020.