BEIJING (Reuters) - China’s record pork prices are set to rise faster in coming weeks, said analysts on Tuesday, even as official data showed that the nation’s most popular meat has already pushed consumer inflation to a six-year high.
China’s consumer price index (CPI) rose 3% in September from a year earlier, according to National Bureau of Statistics data, marking the fastest increase since October 2013.
Food prices have soared, driven mainly by a sharp increase in pork values after deadly African swine fever spread throughout China’s huge hog herd, reducing it by 41%, the government said on Monday.
Retail pork prices were up 84% from a year earlier to 43.4 yuan per kg ($2.78 a pound) in the week ending Oct. 2, according to data from the Ministry of Agriculture and Rural Affairs.
The surge in pork prices slowed in the weeks ahead of the October national holiday, with Beijing releasing 30,000 tonnes of frozen pork from reserves.
(GRAPHIC - Fallout from African swine fever to push China pork prices higher: here)
But price rises are set to speed up again, with live hog prices shooting up after China’s week-long National Day break, said Jim Huang, chief executive of consultancy China-America Commodity Data Analytics.
Live hog prices jumped from a national average of 27 yuan per kg in September to 31 yuan per kg in the first week of October, and hit 35 yuan per kg on Monday.
(GRAPHIC - China retail pork prices surge 80% from a year ago: here)
In southern China’s populous Guangdong province, prices JCI-HOG-GDONG hit 40 yuan per kg last week, with margins for farmers there now at 3,000 yuan per pig. JCI-HOGM-GDON
“Every week it’s a new record,” said Huang. “We saw it really shoot up on the 12th as the market started rebuilding commercial-level inventory after the holiday.”
Further releases from state reserves will have a limited impact, with the volumes held by Beijing relatively small, said Pan Chenjun, senior analyst at Rabobank.
“Q4 is the high season, there’s still room for further increase,” she said.
Huang said state reserves may hold only 1 million tonnes of frozen pork, a drop in the bucket in a market that produced 54 million tonnes of pork in 2018.
Beijing may step in to keep live hog prices from hitting 40 yuan per kg nationwide, said Huang, forcing some large producers to cap their prices.
National Development and Reform Commission Deputy Secretary General Su Wei told reporters on Monday the government was paying close attention to pork prices.
Su said government measures so far had kept prices stable but that further measures could be taken “if necessary”. Su did not offer any details.
While pork prices are likely to rise further, there is also a limit to how much consumers are willing to pay, said Feng Yonghui, chief analyst at industry website Soozhu.com.
“We are skeptical that hog prices will continue to rise sharply,” he said.
Reporting by Dominique Patton; Editing by Tom Hogue