Dim Sums: Agricultural Markets in China

Chinese pork prices have dropped about 20 percent in November. Most industry analysts seem to view the decline in pork prices as a temporary market correction, and they expect a moderate rebound because there is still a 15-to-20 mmt deficit in pork supply. Prices stabilized or started to increase again in nearly all provinces last week.  An industry survey found that 60 percent of industry people expect a renewed increase in pork prices as preparations of traditional pork products to celebrate the new year begin in southern provinces. The average carcass price at the Beijing Xinfadi wholesale market on November 24 was down 23 percent from its October 29 peak of 26 yuan per 500g, erasing about half of the 58-percent increase during October. The price is still 135 percent higher than its year-earlier level of 8.5 yuan per 500g. Chinese news media are thick with propaganda about farmers rebuilding production capacity. Ministry of Agriculture offi...

The Agricultural Development Bank of China (ADBC) has been pumping money into China's agricultural sector by financing most of the grain and cotton marketed this year and lending for poverty alleviation, land improvement, marketing infrastructure, agricultural industry parks, "leading enterprises," and agricultural science and technology. The bank is one more seldom-noticed example of a Chinese economy increasingly propped up by debt. With downward pressure on many commodity prices, ADBC loans are holding up sagging crop markets. In a press conference last month, the bank's president touted ADBC's role in maintaining food security by announcing that ADBC lent 170.4 billion yuan ($24.3 billion) to finance purchases of 124 million metric tons of grain and oil in the first three quarters of 2019--up 87 percent from last year. The ADBC president acknowledged that the bank financed 75 percent of wheat sales this year and 71 percent of early rice purchases. These sha...

"I mports are cheaper; so why is the government spending 17 billion yuan to subsidize soybean-planting ?" was the title of a recent article in No. 1 Business News ( Di Yi Caijing ). The article didn't really answer the question, but a few calculations show that increase in subsidies paid to increase soybean output this year is almost equal to their purchase price. Moreover, the price is dropping as the market for Chinese soybeans appears to be saturated. In the article, China's Ministry of Agriculture and Rural Affairs lauded success of the "soybean revitalization plan" ordered up by this year's "Number 1 Document." The Ministry expects this year's soybean output to increase to 17.2 million metric tons (mmt) from last year's 16 mmt. The plan's objective was to reduce reliance on imported soybeans by 1 percentage point in 2020 and another percentage point by 2022. The Ministry projects a slight increase in imports from 83.1 mmt in...

On-the-ground investigations emphasize that northeastern farms have begun to restore hog production after at least half of the region's swine were lost to last year's African swine fever (ASF) virus and panic-selling. The region is still severely short of pigs, but its slaughterhouses are shipping thousands of carcasses to southern regions where production has not rebounded at all. The facts and figures the report cites suggest there has been only marginal progress in restocking farms, and individual farmers who accounted for the bulk of production pre-ASF are mostly still on the sidelines or raising chickens now. A report from Huatai Futures is based on interviews with farmers, breeding companies, traders and slaughterhouses in northeastern provinces of Liaoning, Jilin, and Heilongjiang--apparently in October 2019. Another online article and an assessment of a drop in hog prices in early November report similar information. This chart claims to show the percentage los...

The price of a lean hog carcass was three times its year-earlier price in Beijing's Xinfadi wholesale market on October 29, 2019. The Xinfadi market's weekly report described the nationwide competition for carcasses that is driving the price upward at an accelerated pace this month. A daily average of 1,450 swine carcasses arrived in the Xinfadi market during the week of Oct. 19-25. The daily supply was up from its low point during the National Day holiday week early in the month, but it was 33 percent less than the 2,350 carcasses supplied daily during the same week in 2018. According to a monthly report for September , the number of carcasses arriving at Xinfadi during July was the largest in 5 years, but tight supplies resulted in a noticeable decline in carcasses arriving during August and September. According to the reports, Beijing's market competes for carcasses transported all over the country. Most of the carcasses in the Beijing market come from the...

China's food security strategy insists on self-sufficiency, yet China also claims to advocate liberalized global food trade, according to a white paper on China's food security released October 14, 2019. The paper recites vague phrases like "keeping Chinese peoples' food bowls tightly in their own hands," a mantra that has been repeated as in speeches and communist party documents since Xi Jinping's ascension to party chief in 2013. The Chinese version of the white paper has an emphasis on self-reliance that is largely scrubbed out of the English translation. The Chinese version advocates a "path to food security with Chinese characteristics" ( 中国特色粮食安全之路 ) that is translated as "food security in China" in the English version. The food security policy is stated in a series of opaque phrases that call for China to remain self-sufficient in grain most of the time by ensuring domestic production capacity while allowing for undefined ...

China's pork output is down 17 percent in Q1-Q3 2019, but the decline accelerated to 42 percent during the third quarter, according to data released by the country's National Bureau of Statistics. September consumer price data show an increase in all meat prices, led by a 69-percent increase in pork costs. The Bureau's economic report on the third quarter of 2019 included estimates of meat output for the first three quarters of 2019 and percentage changes from a year earlier. The country produced 31.8 million metric tons of pork in the first three quarters of 2019, down 17.2 percent from the same period in 2018. Poultry output was 15.39 mmt, up 10.2 percent. Beef and mutton output were a combined 7.9 mmt and rose at a slower pace of 2-to-3 percent. Egg output increased 5.5 percent. The Bureau did not report any animal inventories or number of animals slaughtered. China Livestock Production, Q1-Q3, 2019 Item Q1-Q3 output Change from year earlier...