China’s Pork Market Recovery Struggles to Overcome Tepid Demand

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But the rally is running into a familiar obstacle: consumers still aren’t buying enough.Author of the article: You can save this article by registering for free here. Or sign-in if you have an account.6)hm2zrfdvunwqc65buuyatr_media_dl_1.png Ministry of Commerce(Bloomberg) — The Chinese government’s campaign to lift pork prices is finally gaining traction. But the rally is running into a familiar obstacle: consumers still aren’t buying enough. 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After hitting a 16-year low in June, wholesale pork prices have risen nearly 7% this month. That’s helpful for the government’s priorities of fighting deflation and securing rural incomes. As a snapshot, the price increase is also noteworthy because summer is usually a low season for demand. But broader consumption trends aren’t favorable, suggesting supply still needs to shrink and that any recovery is likely to be gradual and grinding.Get the latest headlines, breaking news and columns.By signing up you consent to receive the above newsletter from Postmedia Network Inc.A welcome email is on its way. If you don't see it, please check your junk folder.The next issue of Top Stories will soon be in your inbox.We encountered an issue signing you up. Please try again“Production cuts will likely continue as the current herd is still above the government’s guidance,” said Pan Chenjun, senior analyst with Rabobank. “Farmers are losing money, so survival of the fittest will continue.” Beijing has been trying to control hog numbers and curb pork output for months. The farm ministry’s latest assessment is that the supply of pigs remains ample and demand is still weak, according to a briefing on Friday.The government’s most important tool is a cap on the nationwide herd of breeding sows, which ultimately determines the pig population. That’s been reduced to 37.5 million head from 39 million. At the end of June, sow numbers were still above the target at 37.8 million.At the same time, pig farmers are bleeding cash. Losses peaked in April, but they’re still losing over 300 yuan ($44) on every hog they raise. The biggest breeder, Muyuan Foods Group Co., is expecting to swing to a net loss of over 5.7 billion yuan in the first half.Oversupply is proving especially stubborn as a slowing economy subdues consumer spending. Moreover, pork’s reputation as the nation’s favorite meat is starting to fray.Per capita consumption has continued to decline, and demand from households has shown only temporary improvements after sharp drops in price, Chinese consultancy Mysteel said in a report. Other proteins, from poultry to lamb and seafood, are taking market share. Catering demand for large groups, from construction sites to schools, has been a particular drag, Mysteel said. The world’s biggest electric-vehicle battery maker, China’s Contemporary Amperex Technology Co. Ltd. posted a 42% increase in first-half profit as it benefited from robust demand for energy-storage systems.Beijing is embarking on a multi-trillion-dollar infrastructure push aimed at laying the foundations for long-term growth in an era it expects to be shaped by artificial intelligence.The US has asked Mexico to mirror Washington’s tariff wall against Chinese steel and aluminum by imposing Section 232-style duties on imports from outside North America.China’s industrial profits for June, 09:30Nothing major scheduledMysteel webinar on China’s ferrous markets, 14:30CCTD’s weekly online briefing on coal markets, 15:00Mysteel webinar on China’s copper market, 16:00China’s official PMIs for July, 09:30China’s weekly iron ore port stockpilesSHFE’s weekly commodities inventory, ~15:30China sets binding targets for renewables use—With assistance from Dan Murtaugh.This advertisement has not loaded yet.Notice for the Postmedia NetworkThis website uses cookies to personalize your content (including ads), and allows us to analyze our traffic. 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