Chinese pork prices are expected to remain low for an extended period, presenting challenges for pig farmers and contributing to deflationary pressures in the economy. Factors such as an abundant supply of hogs, sluggish consumption due to economic slowdown, and the lingering impact of African swine fever have disrupted the usual pork cycle. This prolonged slump may not see recovery until the second half of the following year.
The article highlights the repercussions for global agricultural markets, particularly meat exporters and farmers in the Americas supplying China’s pig herd. The recent decline in consumer prices, attributed in part to weak pork prices, raises concerns about deflation risks in the world’s second-largest economy.
The ongoing pork cycle, influenced by African swine fever, pandemic effects, and industry consolidation, has led to greater price volatility. The current cycle, which began in early 2021, faces challenges with demand potentially not meeting expectations, leading to persistent oversupply.
Despite the usual uptick in demand ahead of the Lunar New Year, there are concerns about consumption levels given the country’s stop-start economic recovery. Pork prices, serving as an economic indicator, reflect excess supply and uneven consumption recovery. The government’s efforts to consolidate the pork sector have shifted more control to larger companies, impacting the dynamics of supply and demand.
While production cuts have been initiated, it may take months for their effects to be felt in the market, with potential price increases only anticipated in the second half of the following year. Challenges such as panic selling due to African swine fever resurgence and slow consumption recovery contribute to the short-term pressure on pork prices.
In summary, the persistently low Chinese pork prices pose a complex economic challenge, with implications for both domestic and global markets, and the article delves into the various factors contributing to this scenario.