Corona gives shock reaction to Chinese pig market

It is anything but quiet in China at the moment. Now that the zero Covid policy has been abandoned, infection numbers are skyrocketing. With all the consequences that entails, the overcrowded hospitals produce distressing images. The inhabitants of China seem to consciously choose this situation. In the sense that the government recently introduced many relaxations after fierce protests in major cities. The high infection numbers are the price that China is now paying for releasing the strict lockdowns. Chinese are allowed to travel out again and the quarantine requirement has also been abolished for incoming travelers.

Although there are no official mortality figures, the British health data agency Airfinity (reported by NOS) assumes 9.000 deaths per day. The daily number of infections is estimated at as many as 2 million. The many infections are currently giving the Chinese economy a serious blow. Labor productivity is declining now that many people are sick. The demand for food is also at a lower level. Pork consumption may now also be more moderate during the Chinese New Year celebrations that take place at the end of January. 

Pig price down sharply
The average Chinese pork price has fallen sharply in recent weeks by about 40% to 15,99 yuan per kilo, the lowest level since June. Some recovery has taken place in recent days, but the rebound in prices in the third and fourth quarters has been completely canceled out. There seems to be a panic reaction. Chinese meat processors are struggling with a lack of staff, which means fewer pigs can be slaughtered.  

In addition to lower meat consumption, Chinese market analysts describe the pork supply as oppressively ample. This is probably also because supply is brought forward to avert price drops. European meat exporters claim that Chinese demand for pork and by-products has plummeted. This also has to do with the loss of demand around the Chinese New Year. The last shipments took place in mid-December to arrive at Chinese ports on time. 

Peak in first quarter?
It is difficult to say how long China will remain under the spell of the many corona outbreaks. The British Airfinity expects the first peak in January and the second peak in March. In the longer term, Chinese demand for pork may increase. After all, the strict lockdowns also had a dampening effect on food consumption. Commodity prices (including meat) also rose rapidly in the Western world when the economy reopened, resulting in high inflation rates. Such a reaction may also be expected in China, although the Chinese government will intervene quickly if inflation threatens. However, that is not the case yet. The government has its hands full with corona at first, that is clear.