Pork prices in China are on a slide. The rapidly increasing corona infections in the Asian country are inhibiting the demand for pork. But that is only part of the reality.
When corona infections soared in China at the end of last year, pork prices collapsed in many provinces together. The price fall continues in January. At the end of last week, the average Chinese pork price was 14,35 yuan per kilo, almost half less than at the top of the market in early November. The rapid fall in prices is due to the flaring corona pandemic, now that the Chinese government has accelerated the relaxation of the measures under pressure from the population. Officially, China has reported 60.000 corona deaths, but the actual number is probably much higher. The Chinese government has confirmed that the number of corona deaths is significantly higher than previously reported. The figures that international media publish on this vary considerably.
The high infection numbers put pressure on pig prices for several reasons. For example, meat consumption will be lower now that many people are sick. The Chinese New Year takes place this weekend. Pork consumption usually peaks at this time, but the peak this year is probably lower than in other years. Slaughterhouse employees are also sick and therefore fewer pigs are being slaughtered in China, local market analysts report. The growing supply of live animals naturally puts pressure on pig prices.
Meat production increased considerably
Speaking of supply, it has increased considerably. In 2022, production grew by 4,6% to 55,41 million tons, the Chinese statistics agency announced early this week. This is the highest level since 2014, which means that the dip surrounding African swine fever has definitively been bridged. The increase in production is also greater than expected. Apart from corona, this puts pressure on pig prices. However, the Chinese figures are considerably higher than forecasts by the US Department of Agriculture (USDA), which estimated production for 2022 at 51 million tons and a production of 2023 million tons for 52.
The reliability of Chinese statistics is sometimes doubted, but in this case there is no reason for China to make the production increase appear higher. The sharply fallen - and now no longer cost-covering - pig prices are a sore leg for the government of Xi Jinping. They focus on stable and cost-covering pig prices, in order to stimulate stable meat production. This in turn ensures affordable and stable meat prices in supermarkets, which Chinese people attach great importance to.
European exports are stagnating
Government officials are now calling on slaughterhouses to maintain increased commercial meat supplies. Indirectly they call for more slaughter and thus get rid of the pig plug. It remains to be seen whether the call will be heeded. For the time being, the direction of the Chinese pork price appears to be downwards. This makes European by-products relatively more expensive. European slaughterhouses report that sales to China have fallen sharply in recent weeks. In the short term, they are often gloomy about the sales opportunities. Chinese pork consumption may pick up again now that the economy is open again, but that is more a matter for the longer term. In China they are now mainly concerned with getting rid of corona as quickly as possible.