China's pork to corn price ratio rises above breakeven point

China's pork to corn price ratio has risen above the breakeven point for the first time in two months following the Chinese government's plan to stockpile frozen pork to support the falling pork prices in mid-June, the National Development and Reform Commission (NDRC) said on Wednesday (Jul 1). 

Currently, the pork to corn price ratio is at 6.13 to 1. If the ratio dips below 6 to 1, it indicates that pork prices are at low levels.

In response to the declining hog prices in May, the NDRC announced its plan to stockpile frozen pork from 35 regions across the country at prices not lower than the market value. It will then sell these supplies when prices are on the rise again. Through this system, the NDRC has established a mechanism to regulate the pork prices. 

According to the NDRC, hog prices have increased for three consecutive weeks since its pork procurement announcement on June 15. Statistics on June 24 showed that hogs were sold at RMB5.15/500g in 36 large and medium-sized cities, a rise of RMB0.30 or about six percent after the implementation of the stockpiling program. Prices of piglet also rose slightly as a result.

Meanwhile, the agriculture and commerce ministries reported a marginal decrease in sow inventory for the fourth successive month in end-May which indicated that the farmers were adjusting their production structure. The ministries also highlighted the issue of hog oversupplies with China recording a third consecutive month of increase in hog slaughtering volume.