August 30, 2011

China releases pork, soy reserves to cool prices

The government of China has been releasing agricultural products reserves such as sugar, pork, and soy in an effort to combat rising inflation pressure.

Analysts say that the series of farm products sales is intended to send a signal that the government is determined to stabilise prices. With the implementation of diverse additional government regulations, agricultural products prices are likely to see a turning point in the second half, they add.

Huang Junfei, an analyst for Changjiang Futures, said that as the government had raised the frequency of reserve sales and in the meantime expanded import quotas, the market started to feel the impact of the government regulations.

The government made a timely release of frozen pork reserves when prices soared, which has had a positive effect in stabilising prices.

Since late June, many provinces have sold reserve pork into the market at lower-than-market prices to check sharp price rises.

Pork prices began to show a trend of stabilising from the middle of July. Chen Yanli, a researcher for the Ministry of Agriculture, pointed out that the government's sales have had a limited impact on prices, but as more live pigs were entering the market, the supply and demand relationship would improve.