China buys pork to bolster local prices

The Chinese government is purchasing pork in an effort to support local pork prices.

The government began the purchases for state reserves in an attempt to reverse a steady decline in Chinese pork prices since the Chinese New Year holiday, according to reports.

This is expected to bolster prices and improve farmer returns. Under the Hog Price Alert programme launched in 2009, the central government typically begins purchasing pork for reserves when the hog to grain price ratio falls below 6:0 for four weeks. This ratio fell below 6 in late February and has remained there ever since.

While no official announcement of the purchases has been made, industry officials believe they are at the direction of central authorities under the nationwide price alert programme. Pork prices are expected to pick up this summer fueled by lower sow numbers and declining piglet inventories.

By the end of March, China's pig inventories reached 441 million, edging down 0.5% from a month earlier but still 7.6% higher than the normal level of 410 million, according to statistics from the Ministry of Agriculture.

Purchase prices of pig in China averaged at RMB9.79/kg (US$1.43/kg) in the April 5-11 period, down 20.8% from this year's beginning and 8% from the same period of last year, a survey by the Ministry of Commerce (MoC) showed.

Meanwhile, average wholesale prices of pork in major large and medium cities held at RMB14.55/kg (US$2.13/kg) in that period, down 6.3% on-year.