Chinese pig prices continue to escalate in peak demand period
Chinese pig prices have been at record-breaking levels since August. The upward trend has continued and by week ended 23 October, live pig prices were almost 37CNY/kg, over 400p/kg.
Wholesale pork prices are also extremely high, averaging 56CNY/kg (£6.21/kg) in the fourth week of October. These prices are more than twice as high as last year’s levels. Declining supplies due to the ongoing African Swine Fever crisis, combined with peak demand due to holiday periods, has driven the significant price rise.
The Chinese authorities are taking a number of measures to quell pork prices. Some pork has been released from national reserves, and some pork purchases from low-income consumers have been subsidised.
The government has also made recovery of the domestic pig herd a priority. According to reports, local provinces have been encouraged to speed up permitting processes, reduce interest rates and relax environmental regulation to aid expansion.
The Chinese authorities are focused on supporting the expansion of large-scale, integrated producers. The central government has already announced subsidies and loans available to large-scale producers to cover up to 30% of construction costs. However, expansion in medium scale farms (1,000-5,000 head) is likely to be limited, due to a high level of debt and a lack of available funding. Therefore, it is likely there will be a shift away from backyard farming towards more larger-scale commercialised production.
While larger-scale farms are expected to see some growth, this will be offset by the liquidation of smaller herds. An effective vaccine remains elusive, so restocking remains challenging. The USDA are still forecasting a further 25% fall in Chinese pork production in 2020, which follows an anticipated 14% fall this year.
Imports of pig meat into China were particularly strong in Q3, with volumes up 55% on the year, totalling 775,700 tonnes. Higher imports are only likely to continue. The autumn festivities depleted inventories, and the difficulty recovering the herd continues to contribute to a supply shortfall.
China has also moved to ease the import of larger pork volumes. This week, the Chinese authorities announced the temporary suspension of pork imports from Canada would be lifted. The ban was implemented in late June. Seven more Brazilian plants were also given approval to supply pork by-products.
These developments follow the announcement last month that a set volume of US pork could be imported into the nation additional tariffs. However, it remains unclear how much and when this product would be allowed to enter the country.