Please Note: Blog posts are not selected, edited or screened by Seeking Alpha editors.

Chinese Government has Started the Purchase and Reserve of Domestic Frozen Pork

www.shcri.com - On 13th June, 2009, Ministry of Commerce of PRC, together with Ministry of Finance of PRC and the Development and Reform Commission of PRC, started the purchase and reserve of the domestic frozen pork by means of electronic bidding to set the processing enterprises and the purchase and reserve prices. Ministry of Commerce of PRC made publicly that the purchase and reserve of the frozen pork can prevent the over decline of the pork price effectively in Chinese market.

 

In the end of 2008, the sows on hand reached 48.59 million, accounting for 10.5% of the total volumes on hand in the end of 2008 and far exceeding the national macroeconomic target of 41 million. In 2009, although the sows showed the decline tendency at link relative ratio, the absolute sow number was still higher than the normal level of 9% set by the state. From the aspect of the variations of the sows on hand during January to April 2009, the on-hand pig structures were seriously unreasonable and the sows passed through the normal level and accounted for 10.8% of the total sows on hand.  The over sows on hand will lead to the increases of the number of the pigs for slaughter and cut down the prices of the pigs and pork. It is predicted that the domestic sows on hand will continue to drop and to the bottom in the third quarter of 2009.

 

In 2008, the pork yields were 46.15 million tons in China, up by 7.6% YOY; the number of the pigs on hand in the end of the year reached 462.64 million, up by 5.2% YOY; the number of the pigs for slaughter amounted to 609.60 million, up by 7.9% YOY. From the aspect of the number of the pigs on hand, the 463 million pigs on hand far exceeded the 410 million set by six ministries and commissions. In 2009, the number of the pigs on hand in China still maintains at high level. In the former four months, the number of the pigs on hand kept around 450 million, resulting in the successive decline of the prices of the pork.

 

In 2006, owning to the outbreak of the swine blue-ear disease, the pig raisers suffered from heavy strikes, leading to the number of the pig on hand down by 16.9% in the end of 2006 compared with that in 2005. From the latter half of 2006, the prices of the pork were rising in Chinese market and reached the high peak during the latter half of 2007 and April 2008. Meanwhile, the prices of the pigs were increased along with the increases of the prices of the pork and reached 10 Yuan/kilogram, near one fold compared with the bad market. After entry the latter half of 2008, driven by the high raising profits, the pig industry was expanded blindly, leading to the serious imbalance of the supplies and demands and the serious pig supply surplus. In 2009, due to the large number of the pigs on hand, the prices of the pork continue to drop, and the retail price was cut down from 20.05 Yuan (2.9 USD)/kg in January to 15.47 Yuan (2.26 USD)/kg in May.

 

From the aspect of the supplies and demands, the pig supplies are still surplus in China. Therefore, the prices of the pork will continue to drop inevitably in short time in Chinese market. However, as the gradual decline of the pigs on hand, it is predicted that the reduction of the price of the pork will slow down in the future and reach the bottom low in the third quarter of 2009. Besides, from the aspect of the seasonal elements, the second quarter is the slack season of pork consumption. As the coming of the busy season of the pork consumption in the third and fourth quarter, it is inevitable for the increases of the price of pigs. For the industry chain side, the pig industry chains are made up of many steps, including the feed stuff production, pig breeding, slaughter and processing, pork sales and residential consumption and involved in various interest subjects, such as the feed stuff enterprises, raisers, purchase, sales and processing enterprises and consumers etc, which either depend on each other and conditioned by each other

 

Source: China Research and Intelligence

If you'd like to copy or quote this article, please keep the source information

 

To get more information, please visit http://shcri.com/reportdetail.asp?id=167