China’s hog prices set to confuse everyone

An official statement by the Chinese Ministry of Agriculture (MARA) in the third week of January is translated as, “The price of pork fluctuates little on the whole and the impact of ASF on the market is limited. Generally, pork prices are expected to show a seasonal pattern: decline in the first half of the year, seasonal recovery in the second half of the year, and differentiation in prices as production and marketing areas are affected differently by ASF counter measures. According to the MARA, the annual average price of pork on the wholesale market was 18.7 yuan per kilogram, down 12.1% year-on-year. After the outbreak of African swine fever in August, due to the inter-provincial embargo on live pigs, the regional balances of supply and demand were unbalanced: prices in production areas fell and rose in the sales (deficit) areas.

In 2019, generally speaking, the price of pigs is expected to increase in the second half of this year, so farmers should be ready to supplement the market. According to MARA, the national pig inventory in December 2018 decreased by 4.8% year on year. The stock of breeding sows dropped by 8.3% year on year, with a drop of more than 5% in three consecutive months, indicating that the number of live pigs on the market in the second half of this year is relatively small and the possibility of price increase is relatively high. In the second week of January, the national average price of piglets was 22.22 yuan per kilogram, down 27.4% year on year and at the bottom of the price fluctuation cycle.”

Our Whole Hog price chart alongside shows how hog prices in China were weak in early 2019 – and this was before Chinese New Year (early February). Meanwhile, trade data show exports of pigmeat to China falling from all the big exporters. They were down 5% from the EU, and down by about 7% from Canda and down 30% from the USA (YTD Nov 2018). All of the above suggests weakending demand in China for pork and pigmeat.

But now (mid March) Reuters presents a report which says almost the opposite on Chinese hog prices. The report cites a Chinese company China-America Commodity Data Analysis (CACDA). It claims, “Live hog prices in major consumption and production areas rose 7 percent on average on Monday compared with last Friday to 15.09 yuan ($2.24) per kilogram, according to data provided by consultancy China-America Commodity Data Analytics.”

Confused? I am? And my confusion isn’t helped by slow release of data by the Chinese Ministry and no explanation of data sources by the company CACDA.