November 30, 2023

China is set to undertake its third pork reserve replenishment this year to counter the sharp decline in pork prices in the country, YiCai Global reported.

The move comes after a more than 30% drop in pork prices significantly contributed to pushing consumer prices into negative territory last month. China’s National Development and Reform Commission, in collaboration with other government departments and agencies, announced its intention to commence the purchase and storage of pork on November 24.

Despite two earlier rounds of stockpiling in February and July, which failed to have the desired impact on prices, pork prices plummeted over 30% last month compared to the same period a year earlier. This decline was attributed to the increasing number of swine ready for slaughter. The fall in pork prices played a role in the 0.2% dip in the consumer price index in October, with a contribution of 0.55 percentage points.

Analysts anticipate a seasonal upswing in pork prices towards the end of the year. The recent decline in prices can be attributed to various factors, including a surge in the number of fertile sows earlier this year and a high count of pigs ready for slaughter in recent times, according to Wang Zuli, the chief hog market expert at the agriculture and rural affairs ministry.

Wang highlighted the approaching peak season for certain animal diseases as the weather turns colder, prompting pig farmers to expedite the preparation of animals for abattoirs to mitigate the risk of epidemics. This faster turnover is contributing to further price drops. But Wang anticipates an increase in pork purchases as New Year's Day and Chinese New Year draw near.

While prices are expected to rise during this period, a subsequent drop is projected in the off-peak season during the first half of 2024, potentially leading the market back into negative territory.

-      YiCai Global