China’s pork prices rose on Monday, the first meaningful rebound in more than a month, as consumption increased with colder weather while supplies remained short in the world’s top consumer of the meat.
Prices have been volatile but analysts say they could now be starting on an uptrend again as consumption will rise during winter through to the Lunar New Year holiday in late January, when meat consumption traditionally peaks.
Chinese pork prices jumped in October to almost three times the prior year’s level after millions of pigs died from African swine fever over the past year and the country’s huge hog herd shrank by more than 40%.
But after topping 52 yuan ($7.39) per kilogramme, prices unexpectedly plunged 20% last month as consumers cut back on the pricy meat and more supplies of frozen pork were released to the market.
On Monday, wholesale pork prices rose 1.1% from Friday, reaching 42.53 yuan per kilo, according to data from the Ministry of Agriculture and Rural Affairs.
"The pig supply gap is still quite big," said Shu Anli, analyst at China-America Commodity Data Analytics. "Consumption also rose as the temperature fell," she said.
After high pork prices pushed China’s consumer price index (CPI) up 3.8% in October, the most in almost eight years, Beijing stepped in to keep prices in check, launching inspections of cold storage facilities and releasing pork from state reserves, according to analysts.
"The government said on November 4 that it will carry out inspections on slaughterhouses nationwide and will destroy any meat with African swine fever virus, then the cold storage facilities panic-sold their meat, which triggered the price fall," said Meng Jinhui, analyst with Shengda Futures.
Six provinces in southern China including major pork consumption regions Guangdong and Guangxi also decided in early November to ban the import of live hogs from other provinces from Nov. 30 to help curb the spread of disease.
Many farmers, worried about a future decline in demand, rushed to send their pigs to slaughterhouses before the policy took effect, cooling prices. Some farmers also panicked on reports of new outbreaks of African swine fever that pushed them to sell their hogs. That increased supply but only temporarily as the market is still squeezed after so many pigs died over the last year.
"Supplies are already tight, now the number of pigs ready for slaughter is even smaller," said Yao Guiling, agriculture analyst at China Securities Futures.
Pork prices are expected to rise further as consumption continues to pick up through to the Lunar New Year holiday.
"As it gets colder, consumers in some southern regions will start preparing preserved pork products, which will push up consumption," said Zhao Yuelei, analyst with Cofeed, an agribusiness research firm.
Chinese Vice Premier Hu Chunhua said on Saturday that the country must resolutely work to achieve the target of recovering pig production numbers, and stabilise pork supply for the upcoming holidays, the official Xinhua News Agency reported.