Chinese pork prices look set to sizzle

Andy Katz/Pacific Press/LightRocket via Getty Images
  • If you’re a fan of pork buns or other pig-related treats, be prepared to pay up for you fix in China in the months ahead.
  • China’s pig herd has been decimated by an outbreak of African swine flu. Some analysts expect it will see Chinese pork production slump 30% this year.
  • Barclays Bank forecasts that prices are likely to surge 30% from a year earlier in the December quarter this year.

If you’re a fan of pork buns or other pig-related treats in China, be prepared to pay up for your fix.

The number of pigs in China is falling rapidly, pointing to the likelihood of sharply higher prices ahead.

This chart from Barclays Bank shows pork prices, as measured by China’s National Bureau of Statistics (NBS) in its monthly consumer price inflation report, overlaid against the annual change in Chinese pig stocks over the past four years. The latter has been inverted and advanced by 12 months.

Barclays Bank

For the pork fans in China, which there are more than a few, prices look set to get a whole lot more expensive based on prior trends.

According to the NBS, pork prices rose by 1.2% in March, leaving the increase on a year earlier at 5.1%.

Barclays said there are two main factors behind the plunge in pig numbers.

“The rapid annual contraction in pig stocks after mid-2018 was due to the outbreak of African swine fever (ASF), first reported in August last year, and still-stringent environmental protection campaign,” the bank said in a note.

China has reported about 120 outbreaks of ASF so far, according to Reuters. The disease has a very high mortality rate for infected pigs, and there is no cure. The disease is not harmful to humans, thankfully.

The precise number of hogs that have been killed by the disease or culled to prevent its spread is not known, although analysts at Rabobank estimate that Chinese pork production will fall by 30% this year compared to the levels seen in 2018.

Even with the likelihood of higher pork imports to help fill the expected void, including from the United States, Barclays forecasts that port prices will surge later this year.

“Given the sharp decline in pig stocks… we expect pork inflation to rise to around 30% year-on-year in the December quarter after experiencing a mild increase in Q2 and Q3,” it said.

“Pig stocks lead pork prices by roughly 12 months.”

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