China Frets Over Coming Pork Shortage

As high costs for animal feed reduce profits and lead to declining pig herds, China is stockpiling frozen pork to control a feared round of soaring food prices next year. From Naveen Thukral at Reuters:

Faced with sluggish domestic demand and the record cost of fattening animals — the result of a steep rise in the prices of corn and soybeans as drought grips the top exporter, the United States — Chinese hog producers are being forced to sell their herds.

China’s food price cycle is driven in large part by pork, the country’s staple meat. And while it is in abundance now, in about six months, meat stocks are expected to fall as a result of the sell-off, resulting in a surge in prices.

Any increase in food price is expected to push up inflation, which now sits at a comfortable level, having cooled from last year.

But inflation is still one of China’s biggest economic concerns given the possibility that rising prices might lead to social unrest.

Xinhua reported on Tuesday that prices for a number of foodstuffs had risen for a sixth consecutive week, but pork remains relatively cheap, increasing the risk of sudden, steep rises next year.

The wholesale prices of 18 types of vegetables monitored by the ministry increased 1.2 percent from one week earlier, with the prices of eggplants, cabbages and celery rising 7.5 percent, 7.1 percent and 5.1 percent, respectively, according to a statement posted on the ministry’s website on Tuesday.

The retail price of eggs continued to climb, up 3 percent week on week but still down 2.8 percent from the same period last year.

The wholesale price of pork, a staple meat in the country, rose 0.8 percent from the previous week but was still 22.7 percent lower compared with the same period last year, according to the statement.

Read more about China’s food prices and inflation via CDT.

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