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Two weeks before the Chinese Communist Party Congress, China is doing everything to lower the price of pork, a strategic commodity in the country. For several weeks, the country has been putting stocks of meat on the market.
China is known for its policy of storing strategic foodstuffs. Pork is one of them, and the country therefore also has frozen pork reserves which are activated by the State as soon as a critical threshold is identified. It is difficult to know the exact volume of this stock, but, according to official figures, 200,000 tonnes of meat were released in September, ie barely more than a day’s consumption. This was therefore not enough to bring down the prices. Hence the announcement last Friday (September 30) of new destocking. ” As the Communist Party Congress approaches in mid-October, reminds an expert, lchina needs to show that the country is healthy, pork supplies are good and prices are stable. It is therefore putting volumes back on the market, as it already had in 2019 before the 70th anniversary of the Chinese Communist Party. explains an expert in the sector.
Prices indicative of a tight market
As everywhere in the world, pork prices have climbed in China in recent months. The country is suffering from soaring livestock feed prices, which constitute 60% of the price of an animal. ” Before arriving at the slaughterhouse, a Chinese pig cost 4.20 euros per kilo at the end of the summer, against 2.70 euros a year ago “, specifies Elisa Husson, agro-economist at the Pork Institute, which is roughly what a pig was worth before the 2018/2019 swine fever epidemic.
But the context is different, and the use of stock, announced by the Chinese economic planning agency (NDRC), is the sign of a tight market, according to Jean-Paul Simier, specialist in agricultural markets. Sign that beyond the production costs which have increased, the supply is also limited, contrary to what the declarations on the reconstitution of the herd suggested, and the production started to rise again.
China is a long-term buyer of meat
China admittedly bought very little in the first half of the year – European meat imports fell by 60% compared to last year – but it is structurally a buyer, as it increasingly consumes meat and dairy products, recalls the Economist. Each year, between five and six million tonnes of meat are missing in the country, including about 3 million tonnes of pork. ” China always makes and breaks the pork market adds our interlocutor, even if its imports are cyclical, depending on domestic production or the political situation. If China starts buying again, already high international prices could rise further. The Pork Institute does not see any slackening in the market before the end of the year.