USMEF report: China's hog industry
With hundreds of millions glued to home television sets
and factory canteens running on low speed, the normal summer lows of pork
consumption are being exacerbated by China's hosting of the Olympic games. This
lull comes as China's hog herd has expanded close to double-digit levels year on
year, with producers responding to strong industry profitability over the past
Reports from USMEF offices in China
point to a negative â€œOlympic impactâ€ on pork consumption. The effect is more
pronounced in Beijing, where tourists have not offset the sharply reduced local
customer traffic in many restaurants.
Some have even chosen to close for
the three-week run of the Olympic games. USMEF-China also notes that urban
clean-up campaigns linked to Olympic events have curtailed street-hawker
activity. As a result, huge volumes of imported pork and poultry products have
stacked up in Chinese cold stores, with some facilities reporting 100 percent
National distribution of imports has also been affected by the
Olympics, as increased security on roadways has slowed product movement.
Finally, falling domestic prices have narrowed the spread between the wholesale
prices for imported pork and local products.
With hog numbers surging and consumption weak, hog-raising
profitability is dropping quickly. A drop in piglet prices over the past week is
an indication of the loss of enthusiasm about the near-term outlook for the
market. Reports of swine fever and other disease outbreaks are also adding to
negative producer sentiment.
However, if piglet prices keep falling -
along with feed prices, which have also been drifting lower in recent weeks
after large jumps earlier in the year - hog production breakevens will drop.
This is likely to partially offset the decline in the live hog and pork
The full report can be
accessed on USMEF's website
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