China pork prices head toward record high on supply concerns

[BEIJING] The rapid spread of the coronavirus in China has failed to dampen a scorching pork rally, with prices heading toward a record high on supply concerns in the world's biggest meat consumer.

Pork prices surged 116 per cent from a year earlier in January, after almost doubling in December, according to data from the National Bureau of Statistics. Wholesale prices, which are just 4 per cent below their record high in November, were boosted by lower supplies due to African swine fever and transport restrictions following the coronavirus outbreak.

China's consumer prices rose the fastest in more than eight years last month, with food prices jumping the most since 2008. Even before the coronavirus, prices were likely to have risen sharply due to the normal spike in demand around the Lunar New Year and the effects of the African swine fever outbreak that has killed millions of pigs and hit pork supplies.

"We expect pork prices to stay robust," at least in the first half of the year because the number of hogs have fallen after slaughtering before the new year, said Lin Guofa, senior analyst at Bric Agriculture Group, a Beijing-based farm consulting firm. The coronavirus attack has also hurt restocking at some pig and chicken farms, Mr Lin said.

Poultry Trade

Pork prices may also get support from the negative impact of the coronavirus on the poultry business.

Road blockades, imposed to stop the spread of the virus in several areas, including top animal breeding provinces of Shandong and Henan, have prompted some hatcheries to kill chicks as the birds could not be moved, said Li Qiang, head of Shanghai JC Intelligence Co. Restocking of chickens could be affected in the first half of the year, he said.

Poor restocking earlier this year could lead to a drop in domestic output of poultry, which is often used to substitute pork, Mr Lin said. The sector was also hit by a bird flu outbreak, with Hunan and Sichuan provinces culling 18,000 and 2,261 chickens, respectively.

Still, closures of most restaurants across the country, part of measures to prevent the spread of the virus, could reduce overall meat demand, Mr Lin said.

BLOOMBERG