BEIJING: China’s soymeal futures slumped on Thursday on growing concerns that a resurgence in African swine fever outbreaks in the country’s huge hog herd will hit demand for the key animal feed ingredient in coming months.

China’s most actively traded soymeal futures on the Dalian Commodity Exchange for delivery in May fell 4.3% to 3,176 yuan ($488.78) per tonne in morning trade, closing down 3.56%, the biggest daily decline in more than two years.

The plunge comes amid growing market consensus that African swine fever, in addition to other hog diseases, has significantly hit the country’s breeding herd in the last three months and could get worse.

“It definitely peaked during the winter, and although we ought to be past that, it’s dragging on,” said Wayne Johnson, a veterinarian with Beijing-based Enable Ag-Tech Consulting.

Livestock analyst Simon Quilty told a conference earlier this month that between 7 million and 8 million sows had been culled since January.

“The market expects that African swine fever would spread further to southern China,” said Wang Xiaoyang, an analyst with Sinolink Futures.

Soymeal futures had hit record highs in mid-January as the rapid rebuilding of China’s hog herd from a devastating epidemic of the disease during 2018 and 2019 drove strong demand for the protein.

But worries about falling demand have now overridden earlier concerns about supplies, as delayed shipments of Brazilian soybean imports led some crushers to consider cutting production.

“Now it seems weak demand could offset some impact of cargo delay,” said a manager with a crusher based in northern China, who said meal stocks were building up.

End users also built up stocks ahead of the Spring Festival holiday in February so demand naturally fell after the holiday, he added.

“Also, the soyoil price is strong, and crushers would want to keep up high operation rates to profit from the edible oil, leading to higher soymeal stocks,” Wang said.