China: Future market fluctuations expected

Blue ear aftermath
"Factors that may affect stable pig production in the blue ear virus aftermath have become increasingly apparent. While the pig population's subsequent rapid increase might lead to a temporary surplus of pork, rising feedstuff and fuel costs might diminish the industry's profitability. Without the adoption of proper measures, this might lead to a new wave of market fluctuations."

The country had endured months of skyrocketing pork prices following the blue ear virus decimating the country's pig population last year, and domestic pork prices had almost doubled since last summer because of rising costs and shrinking supplies. Since then pig numbers have rebounded following government subsidies, with official statistics indicating a rise to 470 million pigs in the first half of the year, about 10 above the same period of 2007.

Analysts optimistic
Market analysts are optimistic about supplies, considering the pork market would be saturated by the end of the year, with prices highest around Spring Festival before falling again to a low point in the second half of 2009. They recommend that pig farmers should decrease the numbers of sows in advance of the festival to prevent further severe price falls.

The Ministry of Agriculture recently stated that the pork price has been continuously dropping since January, and prices have declined 13% on average since then, with the current average price in major markets around 20 yuan per kg, down about 3 yuan from January. The ministry added that pig farmers could currently make a profit of 160 yuan per 100 kg on average, less than half the 400 yuan they earned at the peak season at the end of 2007.

China normally consumes about 50 million tonnes (MT) of pork annually but only consumed 42 MT last year due to the sever shortage caused by the spread of blue ear virus, and will probably be only 46 MT this year.

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