As commerce begins to slow in advance of the Jan. 31 Lunar New Year, China’s hog prices have fallen below 15 RMB/kg (or $1.08 per pound) – down 18 percent from a year ago and the lowest since July.
China’s hog prices typically remain strong through the Lunar New Year before declining seasonally into the second quarter. This year the downturn came ahead of the holiday, as prices ended 2013 on a weak note and have dropped more significantly in January. Several factors are contributing to these lower prices, including:
- Ample supplies of pork, as China’s production increased 2 percent in 2013
- Disease concerns causing producers to speed their hogs to market
- Concern about prices moving even lower in coming weeks
- Persistently high feed and production costs (even following a record corn crop, prices remain above $10 per bushel)
- Large frozen inventories of imported beef, as China’s red-hot market for imported beef has cooled
- China’s austerity campaign, in an effort to save money and cut down on food waste, has discouraged large banquets. This has slowed foodservice activity over the past year and is expected to negatively impact holiday meat consumption.
On a more positive note, USMEF-Shanghai reports that pork variety meat prices have held relatively steady, although imports have slowed and prices for some items have begun to decline. At the same time, the RMB has continued to strengthen against the dollar, reaching a record high of 6.04 RMB per dollar. This is up 3 percent from a year ago, and will continue to help make imported pork more affordable.
USMEF expects China’s overall demand for imported pork to remain firm in 2014, but it will be important to watch price trends after the Lunar New Year holiday.
(Sources: Boyar, USMEF-Beijing and USMEF-Shanghai)