October 4, 2020

China's frozen pork reserves running out?

Has China nearly exhausted its reserves of frozen pork? New estimates by Enodo Economics, a London-based consultancy focused on China, say they're at a low ebb.

The forecasting company estimates that reserves fell by about 452,000 tonnes between September 2019 and August 2020, The Financial Times reports. (The level of reserves is a state secret.)

Enodo's chief economist, Diana Choyleva, said China had less than 100,000 tonnes of pork reserves remaining. "At this rate, within two to three months they'll be out," she was quoted as saying.

The US agricultural attaché in Beijing in a recent livestock report on China also noted that "pork reserves appear to have been mostly depleted by the third quarter of 2020".

As of September, China has released some 550,000 tonnes of frozen pork from state reserves.

The periodic releases are meant to help cool high prices amid a severe production shortfall. But the price of pork rose more than 50% in August year-on-year, official data showed.

Darin Friedrichs, an analyst at commodities broker StoneX in Shanghai, said sales from Beijing's reserves were "more about showing they are doing something", as he said that the surge in imports (July pork imports at 430,000 tonnes were more than double that of the year before) was likely to have "much bigger impact" on pork prices than the depletion of China's reserves.

Data showed that pig-meat import volume in the first half of this year has exceeded that for the full year of 2019.