Sunday, March 10, 2019

Pork Reserve Buy Scaled Back

The first round of China's pork reserve purchases have been scaled back from 100,000 metric tons to 10,000 metric tons, according to a China Feed Industry Information Network report. Stronger hog prices last week may have reduced the urgency of removing pork from the market.

According to the report, the average hog price in China increased 3.85 percent last week. The average was 12.42 yuan/kg, up from 11.96 yuan/kg the previous week. However, the average price of pork fell 0.3 percent and the ex-factory price of a swine carcass fell 1.05 percent.

The report confirmed that pork reserve purchases were due to begin March 8, but "100,000 changed to 10,0000." The 10,000 metric tons of pork translates to 143,000 hogs, the article said (assumes 70 kg of pork per animal).

The reason for scaling back purchases is not identified, but rising prices may have prompted the decision. The analysis said the volume of swine being produced is shrinking slightly, but consumers are reducing purchases of pork and the overall market supply is adequate. The analysis said farmers have become reluctant to sell hogs and prices are rising. The article said that price has become detached from basic supply and demand. Prices are expected to rise gradually, but regional imbalances remain prominent. Price declines are possible in some regions.

The feed industry report also raised concern that the conclusion of U.S.-China trade consultations could result in an agreement to import U.S. corn. The report warned that an influx of U.S. corn would put downward pressure on Chinese corn prices. 

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