Meat has become scarce in China, especially pig meat, and the consumers' reaction is one that looks a lot like desperation. Pork prices in November were 110% higher than a year ago and it will continue to rise over the next month.
"The Central People's Government requires that the supply of pork during New Year’s Day, Chinese Spring Festival, National People's Congress (NPC) and Chinese People's Political Consultative Conference (CPPCC) must be ensured.
In this September, China Merchandise Reserve Management Center (MRM) issued three notices of releasing a total of 30,000 tons of frozen pork from China’s central reserve. On December 10, 2019, MRM released a notice again, that China planned to release 40,000 tons of frozen pork from its central reserves from 1:00 pm to 4:00 pm on December 12, 2019. The enterprises that purchased pork from China’s central reserves must sell it to the end-consumer within one month. In addition, it is strictly forbidden for enterprises to reserve the national reserve pork by themselves,", announced Beef To China in a LinkedIn post.
By these measures, the Chinese government hopes to keep the prices under control for a while but the demand is too high to solve the problem.
The EU, the main supplier of pork in China, is hardly keeping pace with the demand and the US pork is still subject to tariffs up to 70%. However, in October, 20% of the pork exported by the US was shipped to China and the volume may increase in the future. "In the five years before 2019, China only accounted for roughly 10% of US exports. Hog and pork prices in China have soared as the country grapples with the ASF crisis and thus US pork is considerably cheaper than Chinese pork, even when the near-70% tariff is factored in. So, while the US-China trade war rages on other fronts, the Chinese have quietly been snapping up increasing quanti-ties of US pork. Our guess is that without the Chinese business, pork prices this fall in the US could have been as much 15% below current values.," commented Dr. Rob Murphy, Executive Vice President, Research & Analysis, J.S. Ferraro & Company.
Analysts are foreseeing another tough year for the Chinese pork industry with the national swine inventory declining further. At the same time, pork producers who have access to the Chiese market will capitalize on this crisis.