China's volatile pork industry

China’s potential to affect the world pork market derives from the size and volatility of its domestic pork market.

Wednesday 22 February 2012 (6 years 9 months 25 days ago)
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China’s potential to affect the world pork market derives from the size and volatility of its domestic pork market.China accounts for nearly half of the world’s pork production and consumption.Its annual pork output is four to five times that of the United States and more than double that of the European Union.According to official Chinese statistics, China slaughters over 600 million hogs annually—one hog for every 2.2 Chinese people.

Historically, China has been a mostly self-sufficient pork economy.Mainland China traditionally imported modest amounts of pork offal and muscle meats and exported a similar amount of pork and live hogs to Hong Kong (a separate customs territory from mainland China). Some pork shipments from other countries to Hong Kong are re-exported to mainland China through “gray” market channels, but the amount is unknown.While Hong Kong is a short distance from the country producing half of the world’s pork, most of the territory’s imports come from Europe, the United States, and Brazil.From 2000 to 2006, China and Hong Kong combined to import between 500,000 and 600,000 metric tons of pork and pork products annually. These amounts were a significant share of world pork trade but equated to less than 1 percent of annual pork consumption in China-Hong Kong.

China and Hong Kong pork imports surged in 2007 when a shortfall in Chinese pork production led to record Chinese pork prices.That year, Hong Kong-China pork imports nearly doubled to just over 1 million metric tons (mmt), then rose to over 1.9 mmt in 2008.

Rising prices in China’s domestic pork market were the main contributor to the country’s rising pork imports.From 1991 to 2006, Chinese hog prices fluctuated within a relatively narrow range of $.30 per pound to $.50 per pound and were usually less than U.S.prices.After a sharp increase during 2007-08, however, Chinese hog prices have been significantly higher than U.S.hog prices.While Chinese hog prices fell sharply after peaking in 2008, the average price during 2007-10 ($.79 per pound) was more than double the average in 1991-2006 ($.37 per pound).During 2011, prices rose as high as $1.40 per pound.

January 2012/ ERS-USDA/ United States.
http://www.ers.usda.gov/

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