November 27, 2019

Pork prices in China to increase further between now and Chinese New Year - Nomura

Rising pork prices in China due to the African swine fever (ASF) have hurt more than 80% of small Shanghai F&B businesses, as the nation's domestic inflation rate is pushed to its highest in eight years, reported South China Morning Post.

Official data reported a 3.8% increase in consumer prices in October, the highest since January 2012. In addition, the Ministry of Commerce reported an increase in wholesale pork prices to 52.30 RMB per kg (~US$7.45; 1 RMB = US$0.14) on November 1, 2019, before slowing to 47.60 RMB. This is 20 RMB higher than before the ASF outbreak.

According to a November 20, 2019 report by Japanese financial services group Nomura, pork prices are estimated to go up 65-75 RMB from now to Chinese New Year, with prices staying high throughout the first half of 2020. This is due to lower swine and breeding sow stocks.

Rabobank analysts have projected 4.6 million tonnes of swine will be imported into China in the country's effort to supplement the supply shortfall.

Chen Xiao, Shanghai Yacheng Culture chief executive said close to 80% of small restaurants in Shanghai are affected by increasing pork prices. Shanghai Yacheng is a marketing and branding services provider for small companies, including restaurants.

He said this is a major issue as it affects the one million employees that work in the local restaurant industry.

Wang Xuliang, Yi Mian Qian restaurant chain owner in Shanghai said profits have dropped 10% this year as prices for pork continue to rise. He added that state authorities supporting measures aren't enough for him and other players in the restaurant industry.

Wang said they are unable to increase menu prices as customers will not return.

41% of China's swine population has been culled because of the ASF outbreak in a country where 60% of total meat consumption is pork. There is increased demand and supply for the meat, as China approves more overseas pork facilities to bolster swine supplies in the country.

-      South China Morning Post