China warns of soaring pork prices as virus curbs output

[BEIJING] Chinese pork prices are set to jump 70 per cent in the second half of the year, a senior official said on Wednesday, after data showed an outbreak of African swine fever cut the world's largest hog herd by 10 per cent in the first quarter.

China's pork production fell 5 per cent in the first three months of 2019 and much bigger declines are expected in coming quarters, analysts said, as the country struggles to contain the spread of the deadly disease.

The forecast comes as Washington and Beijing are trying to hammer out a deal to end a months-long trade war that could include China buying more US pork to meet a growing supply deficit, sources told Reuters.

"Second quarter will see a marked drop from the first quarter, and the third quarter could be even bigger," said Feng Yonghui, chief analyst at industry website Soozhu.com.

The fall in pork output in the first quarter was muted by demand during China's Lunar New Year festival in February, with farmers worred about weak pig prices rushing animals to market, Mr Feng said.

But a large decline in the breeding herd means output of the country's most popular meat will continue to fall sharply.

The Ministry of Agriculture and Rural Affairs said last week that China's sow herd dropped 21 per cent in March from the same period a year earlier.

African swine fever - deadly in pigs but harmless for humans - has spread rapidly through China, which accounts for about half of global pork output, since the first outbreak was reported last August.

Up to 200 million pigs could be culled or die from being infected by the disease this year, according to Rabobank, which estimated pork production could fall by 30 per cent. Other analysts do not expect such a large impact.

PRICE SURGE EXPECTED

In the first quarter, pork output fell 5.2 per cent from a year earlier to 14.63 million tonnes, while China's hog herd declined by 10.1 per cent to 375.25 million head, the National Bureau of Statistics said.

The number of slaughtered hogs fell 5.1 per cent to 188.42 million head.

The hit to output will push prices in the second half to record levels, and more than 70 per cent above the previous year, agriculture ministry official Tang Ke, told reporters on Wednesday.

Hog prices initially fell on the disease outbreak as many farmers were unable to send livestock south to markets, creating a glut in northern areas, while pork prices only started to rise last month.

Wholesale pork prices are currently about 20 per cent higher than a year ago at around 20.3 yuan (S$4.09) per kg, according to weekly data published by the Ministry of Agriculture and Rural Affairs.

A 70 per cent rise would take retail prices to more than 38 yuan per kilogram, well above the previous record price of 27 yuan per kg in June 2016, according to agriculture ministry data.

Higher pork prices already pushed March consumer inflation to its highest since October 2018, data showed last week.

The statistics bureau data also showed total output of meat, including beef, lamb and poultry, fell 2.8 per cent in the quarter to 22.52 million tonnes.

REUTERS