Pork Outlook for Spring Pessimistic

The Chinese pork sector is subject to cyclical ups and downs in prices. In Sichuan Province, 135 tons of live hogs went unsold at an auction, raising fears that the industry may be facing a downturn. The provincial government got concerned and sent a group of officials out to investigate the situation. Their preliminary conclusions are that there is not currently a serious problem with unsold pigs because it's the peak season for pork consumption (leading up to the Chinese new year). However, farmers are having trouble selling feeder pigs. Corn prices are up, cutting into profits. Pork demand will fall off in the spring months, so farmers are not eager to buy a lot of replacement pigs.

This year has been a mild roller coaster for Chinese pig farmers. The industry suffered losses in April-June due to a cyclical surge in supply and fears of catching H1N1 from pork. The industry recovered beginning in July. Now profits are still positive but shrinking due to a rising corn price. Farmers are not optimistic about the situation several months out when pork consumption reaches its seasonal lull.