Pork prices in China fell dramatically last week for the first time in 10 months as reports of new disease outbreaks in the northeast led to more hogs being sent to slaughter, just as consumers cut back on pricey meat, analysts said in a Reuters report.
Prices hit record highs after an epidemic of African swine fever (ASF) killed millions of pigs in the world’s top pork producing country.
In Beijing, the herd has shrunk 41% - almost 200 million pigs - since a year ago.
October pork prices surged, reaching a high of 53.79 yuan ($7.69) per kilogram on the 23rd, up 188% from a year earlier. Since the end of October, the price has fallen, coming down to 50 yuan on Nov. 8.
“After recent price hikes, pork was already at a point where people can’t afford it, so it just took one trigger,” said Jim Huang, chief executive at China-America Commodity Data Analytics.
Huang feels the trigger was panic-selling by farmers in the northeast about two weeks ago, where reports have circulated about a wave of outbreaks of swine fever. According to Reuters, the outlet could not independently confirm the reports that had been circulating on a platform for investors, but officials in five counties of Heilongjiang province where outbreaks had allegedly taken place said there hadn’t been recent disease.
Additional slaughtering in the north allowed slaughterhouses to push prices paid for live hogs down, driving prices lower throughout the supply chain, Pan Chenjun, senior analyst at Rabobank told Reuters.
These prices also led traders to sell more frozen pork from warehouses.
The high prices have also led to a decline in consumption of about 30% since October, Zhu Zengyong, a researcher at the Chinese Academy of Agricultural Sciences told Reuters, while citing a market survey.
Xinfadi, Beijing’s major wholesale meat market, in its weekly report, said that in late October about 10% of carcasses, and sometimes as much as 20%, were being returned to slaughterhouses unsold because of high prices.
Pan says that because Beijing is likely more resilient than smaller cities around the country, consumption could have dropped considerably.
“This is a correction of the very rapid price increase, not due to any oversupply,” Pan added.
However, she expects the prices to recover soon.
“I think prices will go back to the previous range and probably go up again,” she told Reuters, pointing to rising demand in the coming weeks ahead of the year-end festive period and Lunar New Year holidays.