Freight blockade in China makes the pork prices jump
The average pork price in China is up by 116% compared to the same period last year. Even though after the Chinese New Year holiday pork price has been constantly depressed, this year a blockade caused by the coronavirus outbreak has impacted the market, making the food prices skyrocket.
Since the beginning of the outbreak, China has released from its state reserves almost 100,000 tonnes of pork but the need for meat imports is increasing. The only problem is that more than a dozen cities in China are completely lockdown and the labor force from ports and factories is trapped in this blockade. Rummors coming from the isolated cities are talking about prices of $16 or more per kg of pork.
Wholesale prices, which are just 4% below their record high in November, were boosted by lower supplies due to African swine fever and transport restrictions following the coronavirus outbreak. China’s consumer prices rose the fastest in more than eight years last month, with food prices jumping the most since 2008, according to official data released by the Chinese Statistical Bureau.
The impact caused fluctuations in the American market, were June lean hog futures have lost $25 in less than a week, just to make a partial comeback. "The word 'stable' should never be used in the current scenario of the lean hog futures or maybe even the psyche of many of the US producers. There are reports that imported pork is backing up at Chinese Ports. Not enough trucks arriving to take pork to the next destination due to Coronavirus reaction. We expect this is to get sorted fast," commented Jim Long, CEO and President of Genesus Inc.
The Chinese government announced that business operations may be resumed in some cities starting this week. However, on Monday, February 10, cities such as Beijing, Tianjin, Chengdu, Changchun, Shenyang, Dalian, Xian, Zhengzhou, and Changsha have remained blocked, according to Nippon Express, a freight company operating in China. Wuhan, the epicenter of the coronavirus outbreak it was programmed to resume business operation Friday, February 14 but there is no certainty that this will happen.
As we wrote yesterday, one serious hit was taken by the catering industry. According to a recent report from the Evergrande Research Institute, it’s estimated that the loss of the catering retail industry during the seven-day Spring Festival alone could reach 500 billion RMB ($71.7 billion). For this, if the outbreak is not brought under control in the next couple of months, most of the firms involved in the Chinese foodservice market may not survive.