Restless Over 40% Surge in Pig Prices in China

Urgent Price Meeting as Pork Prices Soar After Early Year Plunge
Pork Prices Influence Consumer Inflation...Strict Warning Against Price Collusion

[Asia Economy Beijing=Special Correspondent Jo Young-shin] Pork prices, which significantly impact China's consumer prices, have surged sharply, raising alarms over price control.

According to Chinese media including the state-run Xinhua News Agency on the 5th, the National Development and Reform Commission (NDRC) of China held an emergency special meeting on pork price stabilization the previous day by urgently convening related organizations such as the Livestock Association.

At the meeting, the NDRC checked the pig farming status, feed prices, and the profit and loss situation of pig farming companies, then instructed to maintain the speed of pig shipments. The NDRC also issued a stern warning to strictly crack down on hoarding and price collusion. Furthermore, it announced plans to release government stockpiles depending on market conditions.

As of the 4th, the average wholesale price of pork exceeded 21 yuan per kilogram. Xinhua News Agency reported that prices have risen more than 20% in just two weeks. The futures price increase is even steeper. On the 4th, live pig futures were traded at 22,695 yuan per ton. This represents an 8% increase compared to the previous trading day and about a 40% rise from the March low.

Photo by Global Times Capture

China is the world's largest consumer of pork. Pork is a major item that stimulates China's consumer prices. Pork prices plunged sharply from the end of last year, halving compared to the previous year at the beginning of this year. As international grain prices such as soybeans and corn surged, the pig farming industry increased slaughtering (supply increase), causing pork prices to plummet. Thanks to this, the consumer price index (CPI) rose only 2.1% until May. There were voices saying that the abnormal pork prices caused an optical illusion in consumer prices.

Chinese media emphasize that the pork price is normalizing, but considering shipment delays due to heavy rain damage in the southern regions, the possibility of further price increases cannot be ruled out. Additionally, shipment delays by farms and the pig farming industry expecting price rises could further fuel price increases. The Chinese government's consumer price management target for this year is around 3%. This is also why the NDRC hastened to control pork prices.

Chinese media forecast that unlike the situation during the African Swine Fever (ASF) outbreak in 2018-2019, the profits of farms and the pig farming industry from the price increase are limited, so pork prices are expected to move around 20 yuan per kilogram.