June 22, 2011

Pork prices hit record high in China

The price of pork hit a new high in China this month, due to rising costs and short supplies amid persistent concerns about soaring inflation.

Pork cost RMB27.67 (US$4.30) a kilo last week, surpassing the previous peak of RMB26 (US$4) set in 2008.

The cost of live pigs also surged to RMB18.57 (US$2.6) a kilo at the end of last week, beating the previous record high of RMB17.20 (US$2.7) reached in April 2008.

"The price will keep rising till the end of the year," said an analyst.

Analysts also said the rising cost of pork was worrying because it would fuel inflation and extend the period of high prices as it takes time for supply to recover.

"Looking back into the history, pork prices are linked the closest to every round of inflation. I'm indeed concerned about this round of sharp rises in pork prices," the analyst said.

The price of corn, which accounts for around 60% of pig feed, hit a record high in March, sending pig and pork prices skyrocketing in the following months.

Price increases in pork, which accounted for 65% of China's meat consumption, risked sending the costs of grains and vegetables up as consumers seek alternatives to meat.

The government could try to curb pork price rises by freeing up supply reserves, Zhu said.

However, the effects could be limited given a general supply shortage after pig farmers slaughtered breeding stock last year due to low prices and diseases.