China’s pig prices bounce back on Lunar New Year stockpiling

Pork and hog prices in China bounced back last week, as last minute, pre-Lunar New Year stockpiling propped values up amid snowy and rainy weather conditions across much of the country, market participants told Agricensus Monday.

China’s pig prices have been under pressure amid weak consumer spending, the comeback of African swine fever, and ample hog and pig inventories since around August last year.

The average price of piglets in China last week increased by 8.7% week-on-week to CNY26.42/kg ($3.71/kg), while the level represents a 20.5% drop from a year ago, according to date from China’s Agriculture Ministry published on Monday.

The average hog price last week also rose by 5.8% and 2.8% week-on-week and year-on-year respectively, to CNY15.56/kg, while pork price increased by 3.6% from the previous week to CNY25.32/kg.

That represents a 9.1% drop year-on-year.

“Slaughterhouses have been in a state of stocking up the animal two weeks ahead of the [Lunar New Year] festival - and affected by the rainy and snowy weather this year, their stockpiling occurred slightly ahead of the usual schedule,” wrote Liu Chenqian, an analyst with Sinolink Securities in a note published on Sunday.

Given the influence such weather has on transportation, the situation has prompted slaughterhouses and pork processing companies to actively stockpile the animal as they consider potnetial logistics factors, and that had brought regional pig prices and the national average prices up, wrote Liu.

But the bounce back seems unlikely to be sustained.

There were 296,000 heads of pigs slaughtered on February 1 nationwide, with the amount exceeding the peak volume seen ahead of Lunar New Year last year and indicating that the slaughter amount and pig prices may have reached their periodical peaks, according to Liu.

Hog supplies remain relatively ample, and with high levels of frozen pork storage, pig prices are expected to fall after the festival, analysts from China Post Securities wrote in another note.