December 12, 2022
Hog prices in China are plunging, which will likely damp food inflation in the world’s biggest producer and consumer of pork.
Live hog futures tumbled more than 7% on the Dalian Commodity Exchange on Monday to the lowest intraday level since April. Farmers are rushing to send large pigs for slaughter to meet demand before the Lunar New Year festival in January, but they are finding that consumption is not as strong as expected.
Top hog farmer Muyuan Foods Co. recently increased its estimates for the number of animals it expects to slaughter this year, indicating that more supplies are likely to come to the market this month, said Wang Xiaoyang, a senior analyst with Sinolink Futures.
Demand for cured pork is also weaker than expected, contributing to the pressure on prices, Wang said. Small breeders are stepping up sales on concerns that prices could fall further.
Farmers usually send hogs for slaughter in the runup to Lunar New Year, when families and friends gather for the country’s most important holiday and enjoy a meat-filled feast. Consumption this year is only slowly recovering after the government eased its Covid rules, which shut restaurants and cut incomes.
The relaxation of the Covid-Zero policy is also leading to more animals coming to market as transport and logistics improve.
© 2022 Bloomberg L.P.
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