China’s pork prices slump with weak holiday demand boost
The sector is key to easing deflation risks, and its troubles underscore an uncertain outlook for the world’s second-largest economy.
[BEIJING] China’s pork prices hit fresh lows as a bleak demand outlook for the upcoming Golden Week holiday offered little relief to a sector grappling with excess supply and sluggish consumption.
Wholesale pork prices were on track to reach their lowest level in 18 months amid an oversupply of meat and weaker-than-expected demand. That suggests recent government efforts to curb production have yet to bear fruit.
Millions are expected to travel, shop and dine during China’s eight-day Golden Week holiday starting on Wednesday (Oct 1), which usually boosts economic activity across the country. But any revival in demand for the nation’s most widely-consumed meat appears limited since wholesalers and retailers have yet to undertake large-scale stockpiling as they typically do in this period.
Beijing has been pushing top pig producers to cut capacity to tackle oversupply and bolster pork prices, an important component of the consumer price index in the Asian nation. The sector is key to easing deflation risks, and its troubles underscore an uncertain outlook for the world’s second-largest economy.
Pork consumption improved a little in September, but hog supplies have remained ample at the same time, Guangda Futures wrote in a note this week. It will therefore be difficult for prices to rebound significantly in the fourth quarter, it said.
Sow herds by the end of August stayed high at 40.4 million heads, down only 0.1 per cent from a month earlier, according to the latest government data. China’s most traded pig futures on Dalian Commodity Exchange continued to fall after declining as much as 3 per cent on Monday.
Downstream demand could be realised gradually since there will be more occasions over the holiday when pork can be consumed, China-based commodity consultancy Mysteel said in a note over the weekend. But time is running out.
Pork prices have plunged 21 per cent in the past year, with farmers suffering average losses of 162 yuan (S$29) per pig. BLOOMBERG
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