July 5, 2011

 

Pork price rally in China expected to continue
 

 

China's record-breaking pork prices this year, a major contributor to increasing food inflation, will continue to rise on low hog production, according to many analysts.

 

The sharp increase in pork prices since the beginning of this year have largely been attributed to lower production by China's small-sized hog  farms that were disappointed by the pork market downturn in 2010. In May, the Ministry of Agriculture released a report saying the country's total pig herds in May had an annual increase of only 0.21%.

 

Ma Chuan, the deputy-secretary general of the China Animal Agriculture Association (CAAA), said two-thirds of Chinese hog farms have a capacity of less than 500 hogs and that the small-scale nature of production has affected growth in output.

 

According to the Ministry of Commerce, wholesale pork prices are up 40% as of the end of May. Average wholesale pork prices rose 4.5% from a week earlier to RMB24.68 (US$3.82)/kg as of June 24, the Ministry of Commerce said.

 

In addition to falling supply, soaring corn prices and higher wages have contributed to increases to pork prices. According to the figures from the Ministry of Agriculture in June, average corn prices from January to May were up by 11% on-year.

 

On June 15, the Ministry of Agriculture released a report based on survey data from January through May which stated that pork prices are expected to boost supply expected later this year.

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