MNI INTERVIEW: China Pork Prices To Support Inflation - Advisor

Pork prices in China, a key component of CPI, will continue to support inflation towards year end due to base effects, but will likely stabilise following their 38% increase since January, and despite the peak holiday season approaching, a pork industry advisor has told MNI.

While balance will return to the market, prices will remain robust but not surpass Q3 2024’s two-year high of CNY20.99 per kg, said Zhu Zengyong, chief researcher at the animal husbandry economic innovation team at the Chinese Academy of Agricultural Sciences. "Pork prices will remain supportive of CPI in Q4," Zhu said, with the base effect set to widen in November and December due to the low prices recorded over the same months in 2023.

May’s modest sow volume rebound will bolster supply during the Q4 peak period along with a seasonal increase in piglets this autumn, which will be less than 2023 when prices dropped, Zhu noted.

August’s CPI showed pork prices increased 7.3% m/m and 16.1% y/y, adding 0.10 percentage points to inflation over the month, according to the National Bureau of Statistics.

Pork prices accelerated from mid-May 2024 after efforts to reduce breeding sow numbers, which began in January 2023, increased over Q4 after some firms took action to alleviate oversupply, Zhu continued. “A low piglet survival rate during winter and spring also exacerbated the summer rally,” Zhu said, conceding the price increase was largely in line with expectations.

Zhu doubted the government will intervene to regulate supply and demand, preferring instead to use market mechanisms.

EU IMPORTS

China will face limited negative impact should Beijing impose tariffs on EU pork imports, worth roughly USD3 billion a year, after launching an anti-dumping investigation in June, Zhu argued.

“Overall, ample pork production capacity and limited import demand will limit impacts,” Zhu said, noting shipments from the U.S., Canada, Brazil, and Russia could replace EU product.

However, cooperation between China and the EU had great potential to drive innovations on breeding, nutrition, farming technology, biosecurity, and technical training, he added.