Pork prices on the rise in China
Since May, live slaughter pig and wholesale pork prices in China are continuously rising and are expected to break the barrier of $7/ kg, says Lyle L Jones, Director of Sales China, Genesus Inc.
The impact of the coronavirus crisis seems to be over and the consumption is back, explains Mr Jones."China’s live slaughter pig and wholesale pork prices are once again on the rise after a steady decline following a drop off after Spring Festival. The downward trend in prices occurred during a time when domestic production is still recovering and a slow rebound of consumption after the Covid-19 epidemic. The high price of pork and drop in consumption from the heavily affected catering business pushed the pig price down to a low point in May. Since the catering industry has resumed operations and factories ramp up production following COVID-19 restrictions. Thus, pork consumption has begun to rebound and has increased significantly," he said in his latest market report.
Due to the lasting impact brought about by ASF, there is a substantial gap in the domestic pork supply in China. To prevent soaring prices, a large amount of imported pork entered into the Chinese market. The import volume of pork reached 3.5 million tons in 2019, which was 1.4 million tons more than the previous year.
Among exporting countries around the world, Brazil and Europe are the biggest beneficiaries of the explosive increase in the demand for pork in China. In 2019 the amount of pork purchased from EU increased by 76%. According to the recent data released by GACC, China has imported 2.123 million tons of pork from January to June 2020 with a year-on-year increase of 140%.
In 2019 the Chinese hog inventory decreased to 310 million heads, and the number of marketed pigs had a sharp drop to 540 million heads which amount to a year-on-year decrease of 21.57%.
With the rapid decline in production capacity, pork prices continue to rise. To stabilize the local market, in March 2020, the Ministry of Agriculture and other governmental agencies released a set of policies to support the hog farming industry. Since then, many companies have announced aggressive new plans to increase production. According to the National Bureau of Statistics, the national pig inventory is 339.96 million head at the end of Q2, increasing by 5.8% over Q1. Among them, the sow inventory is now reported to be 36.29 million, which is an increase of 5.4% on a year-on-year basis, or up 7.3% over Q1.
However, China's demand of pork is yet to remain high due to the massive reduction in the national inventory. "The combination of ASF with the shock of COVID-19 creates a lot of uncertainties in the recovery of China’s production capacity and pork supply. There is no doubt that the import of superior swine genetics from International companies will play a critical role in speeding up the recovery of China’s hog industry. Since the beginning of 2020 imports have resumed, and large numbers of breeding pigs have been flown into China to help resupply its breeding farms. It’s been reported that more than 100 planeloads of international genetics are needed to fill this void left by ASF," added Mr Jones.