Pig prices: China declares warning level 2
Pig prices

China declares warning level 2

Imago / China Foto Press
Price pressure on the Chinese meat market makes exports to the People's Republic less attractive.
Price pressure on the Chinese meat market makes exports to the People's Republic less attractive.

CHINA, Beijing. Rising production is putting price pressure on the market for slaughter pigs in the People's Republic. Rising feed costs are placing an additional burden on producers. The government intervenes.

Not only in Germany, but also in China, low slaughter pig prices are offset by high feed costs. Because this ratio recently deteriorated further, the National Development and Reform Commission yesterday declared the second of a total of three warning levels.

According to its surveys, the ratio of pig price to feed or grain price in the last week of January was 5.57 to one and thus for the third week in a row in the range of 5.00 to one to 6.00 to one, which triggers the second warning level. According to the 2021 stabilization measures adopted, local governments are now being considered to begin or prepare to purchase pork for storage. Only in warning level 1 will such purchases become mandatory.

Demand slows after New Year's holiday

After the end of the Spring Festival in early February, the market situation deteriorated even further, at least as far as slaughter pig prices are concerned. The nationwide average price was reported Wednesday at CNY13.05 (€ 1.79) per kilogram of live weight (LW), down 4.2% from the end of January and 57.5% from a year ago. After the New Year's holiday, current pork demand is considered weak by market watchers, and slaughterhouses are operating at low capacity, resulting in a more than adequate live supply.

No rapid improvement in sight

According to analysts, the Chinese pork market is expected to remain well supplied in the coming months. The sow inventory had reached a high in June 2021, which suggests a large supply of slaughter pigs by mid-2022. The barely cost-covering prices for slaughter pigs are therefore likely to remain at a low level for the time being, and at best increase moderately. This is also the view on the futures market for live pigs, on the Dalian Commodity Exchange (DCE). The settlement price for March futures there today was CNY 13.44/kg (€ 1.85), only slightly above the current spot market price. Contracts maturing in May 2022 settled yesterday at CNY 14.74/kg (€ 2.03) and for September at CNY 17.00/kg (€ 2.33).

The foreign exchange figures correspond to a conversion rate of 1 Chinese renminbi yuan (CNY) = € 0.14.

Source: fleischwirtschaft.de; AgE

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