PEKING Pork production in the People's Republic continues to grow, according to government figures. The supply for the holidays is said to be secured. Prices picked up again recently.
After a long and sharp decline, slaughter pig prices in China have rebounded by nearly 70 percent from their early October low to last week; however, they continue to fall well short of year-ago levels. The recent price surge has raised hopes among global exporters that the losses incurred by producers during the low prices have caused domestic supply to dwindle and China's import demand for pork to pick up.
But Xin Guochang, director of the Beijing Ministry of Agriculture's Animal Husbandry Bureau, takes a different view. Speaking to state broadcaster CCTV recently, he pointed out that China's pork ore consumption in the first three quarters of 2021 rose 38 percent year-on-year to 39.2 million tonnes. In the following month of October, 30.2 million pigs were slaughtered, up 5.1 million from September and 111 percent year-on-year, he said.
Guochang said there were 43.5 million sows in China at the end of October, above the target level of 41 million head, surpassing the October 2020 level by 6.6 percent. The number of piglets born in June and July this year increased by 39 percent and 33 percent year-on-year, respectively, according to the expert, which will be available in time as slaughter pigs for the peak demand in early February 2022. "The total quantity of pigs and pork will be sufficient to supply the market on New Year's Day for the Spring Festival," Guochang highlighted. While fluctuation in pork prices cannot be ruled out, he said he does not expect a significant increase until the festive season.
Picking up demandAccording to
the national survey, the national average slaughter pig price per kilogram of live weight in China was CNY17.78 on Dec 1, 2021. This is equivalent to 2.47 euros. At the beginning of October, it had still been CNY 10.56 per kilo (1.47 euros) due to the high volume of slaughter pigs, but exactly one year ago it was CNY 32.20 per kilo (4.47 euros). Analysts attribute the price increase in recent weeks less to a decline in supply, even though not as many heavy pigs have been sent to slaughter recently and reduced pork imports have made themselves felt.
The main reason for firmer prices was seen as the seasonal pick-up in demand in autumn, and in some cases production of traditional sausages for the Spring Festival has already started. Some analysts in China believe slaughter pig prices could rise to levels above CNY20 (EUR2.78), especially as piglet prices have also been rising steadily since mid-October.
Warning of strong production increase
However, there is currently no indication of this in trading on the futures market for live pigs on the Dalian Commodity Exchange (DCE). The settlement price for the January future was CNY 16.22 per kilogram (EUR 2.25) on 1 December 2021, and CNY 15.34 per kilogram (EUR 2.23) for the May 2022 maturity. Another argument against a stronger price increase is that larger quantities of pork in state-owned warehouses from the low-price phase are still waiting to be released. In addition, Guochang pointed out that consumers were also increasingly consuming poultry, beef and lamb, and that the share of pork in total meat consumption was falling. He even warned against expanding pork production too much due to the recent price hike. With the current pork price, analysts say it should easily break even again.
The foreign exchange figures correspond to a conversion rate of 1 Chinese renminbi yuan (CNY) = 0.1389 euros.
The Spring Festival marks the New Year in the People's Republic of China. It lasts six days and will be celebrated in 2022 from February 1 to 6.
Source: fleischwirtschaft.de; AgE