July 10, 2020

 

Decline in China's meat imports to further lift pork prices

 

 

Due to tightened measures against coronavirus contamination, China's declining pace of meat imports will provide further support for prices already buoyed by a severe pork shortage, analysts said, Reuters reported.

 

Purchases of pork and other meats have soared this year after domestic production shrank 30% following an outbreak of ASF that devastated China's hog herd, but the recent anti-contamination measures threaten to reduce imports.

 

Beijing has suspended imports from more than 20 overseas plants processing pork, beef and poultry since mid-June, after workers were infected with the virus.

 

Now stuck at ports are products of some plants shipped before their suspension, said Grace Gao, manager of Dalian-based importer Goldrich International, which has two such containers held up.

 

"You can't take delivery of it, even if it has been given a negative test," she said.

 

While hundreds of other plants retain their approvals to ship to China, the virus tests are delaying port clearances for containers.

 

Imports had already begun to slow after prices weakened in China during March and April and exporters battled virus outbreaks.

 

Imports are now about 15% costlier than in early June, said Shi Lei, a manager at meat importer Beijing Hopewise International Trading Co Ltd.

 

"Loading of beef in June dropped about 30% to 40%," he said.

 

Smaller imports follow a surge in domestic prices since mid-May to the level of about RMB38 (US$5.44) a kg for live hogs, hovering near a record set last October.

 

Analysts blame tight supply for much of the rise as consumption begins to recover.

 

Official data shows the number of slaughtered pigs still down 30% in May on the year, said Wang Lisheng, an economist at Nomura International.

 

"This doesn't bode well for China's pork supply in the near term," he said, adding that heavy rain and floods could constrain pig farming and hog delivery in southern China, perhaps for a few months.

 

The pandemic abroad could also support prices by restricting exports, he added, though that impact was minor compared to the domestic supply gap.