Main points
- Chinese pork producers are suffering losses as pork prices fall to a 15-year low and production costs rise.
- The authorities are calling for a reduction in the number of sows and slaughter volumes, buying up pork for reserves, but feed costs and weak demand remain problems.
Pork prices have fallen in China / Photo Unsplash
Chinese pork producers are suffering significant losses due to falling prices and rising costs, compounded by weak demand and rising feed prices amid geopolitical tensions.
What caused the crisis in China's pork market?
China's pork industry is in a deep crisis, with producers increasingly operating at a loss, Bloomberg reports. Weak domestic demand and rising production costs are weighing on the market.
According to the publication, since last year the government has been urging farmers to reduce the number of sows and slaughter volumes in order to balance supply and demand. The state has also been buying up frozen pork for reserves in an attempt to stabilize prices.
The measures were introduced after pork prices fell to their lowest levels in at least 15 years and producer profitability fell to a four-year low.
Important! Demand remains weak amid the economic slowdown following the COVID-19 pandemic, with households spending less on meat. At the same time, supply remains oversupplied as farmers are in no hurry to reduce production.
What are the forecasts of Chinese pig farmers?
Additional pressure is being exerted by rising feed prices. Prices for key ingredients – soybean meal and corn – have risen sharply due to tensions in the Middle East and disruptions in energy and fertilizer supplies.
Analysts estimate that if the situation does not change, Chinese pig farmers may accelerate production cuts or even leave the industry in the coming months.
Producers are currently losing more than 400 yuan ($58) per animal , and wholesale pork prices have fallen to around 17 yuan per kilogram, the lowest level in four years.
The EU will check Ukraine: will they open the pork market for our products?
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Ukraine is preparing for an EU verification mission to assess the state control system, which may allow the export of heat-treated pork to the EU.
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The inspection, scheduled for April, could be an important signal to international partners and confirm the compliance of Ukrainian products with European standards.