China runs out of cold storage space for meat imports amid mass cull

Beijing

CHINA'S scramble to import as much meat as possible to compensate for the drop in pork supply from a pig-killing disease has left it with a big problem - cold storage space at its major ports is running out.

Importers have stockpiled a large amount of meat - mostly pork and beef - and chilled storage at ports including Tianjin, Shanghai and Dalian is now almost full, said Wang Zhen, an official at China's Cold Chain Logistics Subcommittee, an industry group.

The meat is likely to be stored at the ports through to the end of the year in anticipation of the country's peak consumption season, she said.

Fresh sizeable shipments will have to wait until buyers can find storage place, she added.

"Importers are trying to move the meat to inland areas to store it, but it's more expensive as they plan to store the meat for months until the mid-autumn or spring festivals," Ms Wang said.

Inland storage facilities are only for temporary use, and costs are higher than those at ports, she explained. The lack of capacity may limit opportunities for global meat producers, who have been working to strike export deals with China.

The UK, Germany, Russia and India are just some of the countries that are seeking to sell more meat to China, while shipments from poultry-giant Brazil have surged this year. Brazil's pork exports to China surged 51 per cent year-on-year in May, while chicken shipments jumped 49 per cent.

China bought a record amount of meat in April as African swine fever caused the slaughter of one million hogs in the world's biggest pork market.

Tianjin Zhongyu Real Estate Co, the largest storage facility operator in the Tianjin area, said cold space at some major ports is almost fully occupied. In Tianjin alone, about half a million tonnes of meat are in cold storage.

Large meat shipments to China may need to wait to find space until domestic meat prices rise further or until September or October, when some of the stored meat may be sold, said Cao Guoliang, an operations manager at Zhongyu.

"Most of the importers bought the meat in March and April, and they are likely to release the stocks when they see a profit of say 3 per cent to 5 per cent," said Mr Cao. Current prices are not profitable for them to sell, he added.

Lean hog futures in Chicago had surged to the highest in five years in April, but have since fallen 17 per cent.

Spot prices for pork in China's Chengdu region traded at 16.2 yuan (S$3.20) per kilogramme on Tuesday, down from as much as 21.2 yuan in December.

China's pork prices are likely to surge to a record in the second half of this year as farmers hold off on restocking their herds for fear of swine fever. BLOOMBERG