China’s hog prices, near decade low, seen squeezing profitability amid deflation risks
Ministry data reveals nine-month slump in breeding stocks while top-listed companies face big financial hits as rising fuel and grain costs erode margins
Hog prices in China, a critical bellwether for the nation’s inflation, remained at low levels over the past week despite signs of stabilising, with policymakers looking to ward off deflationary pressures.
Prices of live pigs have rebounded 15 per cent from a 10-year low in mid-April, according to data from the Ministry of Agriculture and Rural Affairs on Monday, following voluntary supply cuts by farms and a government-led push to reduce breeding.
But even with the bounce, prices remain near one of the lowest points in nearly a decade, hitting 10.12 yuan (US$1.49) per kilogram last week – a marginal 0.4 per cent dip from the previous week and a 32.2 per cent slump from the same period a year earlier.
Falling pork prices are complicating Beijing’s fight against deflation, while chronic overcapacity in the hog sector squeezes millions of pig farmers who also face rising costs for oil, grain and feed due to war in the Middle East.
“The price recovery in May was a result of hog farmers’ decisions to reduce supplies voluntarily,” said Wu Bingxin, an analyst at Orient Futures. “Demand [for pork] has yet to recover.”
The aggressive cull at pig farms came as the sector was enduring significant financial distress from low pork prices.