China US pork purchases slow as prices rocket

21 Mar 2019 | Andy Allan

Chinese purchases of US pork fell sharply last week compared to the week before amid skyrocketing prices and despite more outbreaks of African swine fever.

Just 3,000 mt of US pork was sold last week, down almost 90% on the 24,000 mt that was purchased the week before.

China is suffering from a 15-20% reduction in the size of its pig herd – the world’s largest.

The USDA expects pork imports will increase by a third with chicken meat up 8% as importers seek to work open arbitrage opportunities.

However, reports that the deadly virus is sweeping across other southeast Asian nations have caused lean hog futures on the Chicago Board of Trade to spike 40% to 76 c/lb ($1,672/mt) over the last three weeks and 15% in just a week.

That price compares with Chinese lean hog prices at the factory gate of around CNY20.16/kg ($3,010/mt), up 37% on the year and 14% on the month.

But with a 70% import tax on US pork, as well as freight and unloading costs to take into account, the profit margin of buying US pork and selling it into China is thinning.

On Thursday China’s agriculture ministry reported another outbreak of African swine fever in Chongqing city.

The outbreak occurred at a farm with 91 live pigs, of which nine were infected and six were killed by the disease, with the ministry implementing an emergency response plan to isolate the event.

“All pigs and their products are prohibited from being transferred out of the blockade, and pigs are prohibited from being transported into the blockade,” the ministry said.