Chinese pork prices, up over 30 per cent in April, will stay high
Breeders continue to withdraw from the market and enterprises are slow in increasing supply.
China’s pork prices will remain high until the end of the year because both companies and individual suppliers have only slowly increased supply. That’s despite the profitability on offer by selling the meat.
April’s spot pork price surged 33.5 per cent year-on-year in China, the world’s largest consumer, and contributed 75 basis points to April’s consumer price index of 2.3 per cent, according to the National Bureau of Statistics.
“The pork price may continue to rise until the end of this year or even into the first quarter of next year. The peak could hit 24 to 25 yuan (HK$28.5 to 29.7) a kilogram,” Zhou Sha, a CMS Securities analyst said.
The spot pork price reached 20.3 yuan per kilogram on May 19. That was a rise of over 20 per cent for this year due to a supply shortage. The last time there was such a rally was in 2011.
“Not only did the number of slaughtered pigs fall, but the number of hog farms and sows decreased. Sellers are not manipulating the price by slowing slaughtering. There are not enough pigs for slaughter,” Lu Zhengwei, chief economist at Industrial Bank, said.
In the past, small-scale individual operators — who contribute 55 per cent of domestic supply — would buy piglets for eventual breeding when they saw market demand exceed supply and pork prices were rising. The piglet would grow over six to nine months and then there would be a surge in supply.