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Further Decline in Hog Prices; Large Meat Imports in 2013

Chart comparing China's Live Hog prices weekly from January 2010 through December 2014 in RMB/kg (Chinese yuan)

As USMEF reported last week, China’s hog prices have been declining since December. Prices fell another 6 percent earlier this week to about $1.03 per pound, which is 23 percent lower than a year ago. Corn prices were reported down 4 percent from a year ago (still about $10 per bushel), but compound feed prices were 1 percent higher. The hog:corn ratio fell below the 6:1 profitability line for the first time since July. Last year the hog:corn ratio was below 6:1 from March through early July. This year hog prices have fallen earlier and more dramatically, heightening concerns about producer profitability.

Chart comparing China's hog/corn price ratio monthly from January 2010 through December 2014

China’s National Bureau of Statistics recently announced that China’s pork production reached 54.93 million mt in 2013, an increase of 2.8 percent over 2012. The live hog inventory was 474.1 million head – down slightly from 2012 – but live hog output reached 715.57 million head, up 2.5 percent. Although China does not publish sow inventory numbers, Boyar estimated the 2013 breeding herd at 49.03 million head, down 1 percent from 2012. Plentiful supplies, disease concerns and high production costs have all contributed to a steady decline in China’s piglet prices, which are now 11 percent lower than a year ago.

It is important to note that domestic prices and trends vary between the different analyst estimates and China’s official data, but the downward trends are clear and significant. While China’s prices typically decline after the Lunar New Year holiday (this year’s holiday begins Jan. 31), the price drop began several weeks earlier than usual this year.

Chart comparing China's Beef & Variety Meat monthly imports from January 2011 through December 2013 in Metric Tons

China’s pork and pork variety meat imports were strong in 2013 despite larger domestic production, which indicates an increase in consumption. Imports were up 3 percent in volume (1.396 million mt) over 2012 and increased 8 percent in value to $2.617 million. Pork variety meat accounted for about 57 percent of total import volume.

Pork/pvm imports from the European Union were up 36 percent to 827,093 mt, accounting for 59 percent of China’s import volume. For individual countries, leading suppliers were the United States (365,455 mt, -38 percent), Denmark (233,917 mt, +6 percent), Germany (225,754 mt, +45 percent), Canada (164,535 mt, +22 percent) and Spain (125,845, +17 percent). USMEF will report estimates of regional trade once the Hong Kong import data is published, as the decrease in imports from the U.S. was not as dramatic as is shown in China’s import data.

China’s beef and lamb imports were also robust in 2013, as total red meat import value reached $4.865 billion – up 55 percent from 2012.

Although its beef market has cooled recently due to high inventories, China’s beef/beef variety meat imports set another monthly record in December at 32,047 mt, up 107 percent year-over-year. This pushed total beef/bvm imports in 2013 to 314,437 mt, up 346 percent over 2012. Import value was $1.33 billion, up 373 percent. Leading suppliers were Australia (163,995 mt, +420 percent from 2012 and capturing 52 percent market share), Uruguay (79,630 mt, +331 percent, 25 percent market share), New Zealand (37,040 mt, +353 percent, 12 percent market share) and Canada (24,388 mt, +658 percent, 8 percent market share). Domestic wholesale beef prices continue to set records at $4.78 per pound, up 15 percent from a year ago. As previously mentioned, however, large inventories of frozen imported beef are weighing on the market and it will be important to watch price trends following the Lunar New Year holiday.

China’s sheep meat imports in 2013 reached 254,379 mt valued at $935 million, up 106 percent in volume and 122% in value over 2012. New Zealand (137,427 mt, +94 percent) was the leading supplier, followed by Australia (107,480 mt, 112 percent) and Uruguay (9,471 mt, +345 percent).

(Sources: Global Trade Atlas, China’s National Bureau of Statistics and Boyar)