China’s live hog futures fell to a weekly low on Friday, erasing some gains made earlier in the week, as ample pork supplies weighed on prices.
Live hog futures on the Dalian Commodity Exchange were down 3.5% at 18,595 yuan ($2,869.02) per tonne at the close of Friday’s afternoon trading session.
The futures contract, which launched in January this year, has shed a third of its value since May tracking weak live hog spot prices and as large volumes of heavy pigs were being sent to slaughter.
Prices rebounded last week and rose to a weekly high of 19,800 yuan per tonne on Monday, as the number of large pigs in the market declined and as recent announcements by state entities shored up market confidence.
Analysts however had expected the market rebound to be a short term trend, as pork supply in China still outstrips demand.
“The rebound was because of funds long positioning in the futures market, but the (situation of) pork supply and demand has not changed. So the rebounds won’t last long,” said Rosa Wang, an analyst with consultancy JCI.
“It does not support a continual price hike at the current time. Pork and other meat supply remains abundant but demand is relatively weak.”
Hog prices in China, the world’s top pork consumer, have dropped more than half since the start of the year as domestic production surged and huge volumes of imported pork reached the market.
Hog prices are also typically weak during the summer months when pork demand is lower.
($1 = 6.4813 Chinese yuan renminbi) (Reporting by Emily Chow; Editing by Christopher Cushing)
