Tuesday, April 13, 2021

Chinese Farmers Dumping Pigs Ahead Of Swine Fever Recurrence

Well, we've seen this movie before.

First the deceased porkers stop eating hitting American grain exports. Then the Chinese preference for fresh vs frozen meat setting up price differential until the herds are depleted then the big drawdown from inventory begins.

From Bloomberg, April 12:

China Pork Price Hits 2019 Low as Swine Fever Spurs Selloff

  • Wholesale pork prices had worst quarter since at least 2006
  • Slide in costs may help curb inflationary pressures in China

China’s pork prices have slumped to the weakest in 19 months amid panic selling by farmers after fresh outbreaks of African swine fever and bans on the transport of live hogs in some parts of the world’s biggest consumer and producer.

Wholesale pork prices plunged 19% in the first quarter, the most since at least 2006, and touched 34 yuan ($5.20) a kilogram in early April, the lowest since August 2019. The selloff started in mid-January amid new outbreaks of African swine fever in some northern provinces and on bans by the south on live hogs from the north, said Zhu Liang, analyst with Chaos Ternary Futures.

The slide in pork costs may help curb inflationary pressures in the country. The producer price index climbed 4.4% from a year earlier in March, the most since July 2018, according to the National Bureau of Statistics. The consumer price index increased 0.4% after falling for two straight months.

Selloff on swine fever fears pushes pork prices to 2019 low

The slump in domestic prices damps the outlook for more overseas purchases because some buyers are selling at a loss, said Lin Guofa, a senior analyst at Bric Agriculture Group. Imported meat stockpiled in cold storage and at ports has been gradually released into the domestic market in recent months as authorities decided to speed up clearance of shipments....

....MUCH MORE

Have I mentioned the hog cycle recently?

Here's the ten second tutorial on Ag cycles:

April 23, 2008
The Hog Cycle
No not Harley-Davidson, although I imagine some econ grad student has written the paper.
Wheat and hogs are two commodities with long price series. We mentioned the hog cycle back in January:

The hog price series is one of the longest we have records for, back to the 1200's. The cycle is:
slaughter begets scarcity begets higher prices begets breeding begets over-supply begets slaughter. It's been going on for a while....