August 16, 2011

 

 

Live hog stocks in China grew for the fourth consecutive month in July, the Ministry of Agriculture (MOA) said Thursday (Aug 11).

 

China's live hog stocks totalled 3.8273 million head at the end of July, up 1.1% from the previous month and 1.1% from a year earlier.

 

Meanwhile, China's pork prices are stabilising. MOA statistics show that the price of live hogs averaged RMB19.03 (US$2.97)/kg in the first week of August, up 0.4% from the previous week, while average pork prices for the same period gained 0.1% from the preceding seven days to RMB29.54 (US$4.60)/kg.

 

While a rising hog population has in part helped stabilise pork prices, government officials have warned that farmers are overstocking piglet inventories, and this may contribute to pork prices falling sharply once the high-consumption season tails off - after the Lunar New Year in January.

 

Pork has a relatively heavy weighting in China's consumer-price inflation, which is near multiyear highs.

 

The population of reproductive sows, a key subset for the pork industry, rose 1.4% on-month to 468,600 head, marking the third month of increases, China National Grain and Oils Information Centre (CNGOIC) it said, calling the latest rise "on the strong side."

 

Feed mills and traders had done some restocking of their feed inventories, but have not been buying much recently, which is likely to create upward pressure on feed prices as they return to the market later, the CNGOIC said.

 

"Meal prices may show high volatility as demand rises in the longer term," it said.

 

The government's top pricing authority has warned that pork prices may be headed for more cyclical volatility as well.

 

"Piglet prices are now double pork prices, which shows that hog farms are enthusiastically replenishing stocks," Zhou Wangjun, deputy director of the National Development and Reform Commission's pricing section said last month, describing piglet prices as "not normal."

 

The commerce ministry earlier this month asked local governments to step up their stockpiling of meat and grains, though government-linked economists have also argued macroeconomic policies can "do little about the hog cycle and usually should not respond to it."

 

Meanwhile, the government has released frozen pork stockpiles and reintroduced subsidies to stimulate hog production as part of a programme that favours large-scale farming.