Pork prices in China are falling, despite attempts to build up stocks

Source:  GrainTrade
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Pig and pork prices in China continue to decline under the pressure of weak demand and a fairly large supply, Agrisensus reports.

Thus, during the last week, the average price of pigs fell by 1.3% (-46% for the year) to 23.72 yuan/t or $3.35/kg, and for pork – by 0.5% (-35, 5% per year) to 24.81 yuan/t.

In the week before last, hog and pork prices rose 1.2% and 0.2%, respectively, giving livestock producers hope that prices have started to recover. But a new drop in quotations destroyed these hopes.

China’s recent pork-to-grain price ratio has been 5:1 or 6:1, while the break-even point is 7:1. This means that livestock farmers receive significant losses. Therefore, the government announced that it will purchase 10,000 tons of frozen pork for the state reserves in order to support prices. This will be the third such purchase this year.

The livestock situation affected the soybean meal market, which fell from RMB 4,008 to RMB 3,938/t during the week. Sales of soybean meal for the week decreased from 739.2 thousand tons to 418.4 thousand tons.

The excess supply of pork in the country is due to the fact that large livestock companies began selling meat earlier than usual due to fears of outbreaks of ASF and other diseases, as well as due to an acute need for funds.

At the same time, the demand for pork turned out to be lower than usual, because due to the high air temperature, households have not yet started canning meat. Traditionally, the Chinese actively buy pork for cooking during the Chinese New Year celebration. In addition, demand was negatively affected by the spread of influenza and SARS in the north of the country.

According to the Ministry of Agriculture of the country, the number of sows decreased from 43.67 million heads in January to 42.1 million heads at the end of October, which is 3.9% lower than last year’s figure. The ministry believes that animal husbandry remains under the double pressure of capital outflow and debt repayment, so production capacity may be significantly reduced.

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