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08

2022

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07

How Much Pork Reserve Volumes Can Put into Curbing Surging Prices?

Source:

Recently, the National Development and Reform Commission (NDRC) announced that it would release the central reserves of frozen pork locally to curb the surging prices. At present, how much the central reserves can be released remains to be a heated topic. However, relevant experts believed that the existing inventory is relatively small that its effect on the fresh pork market is basically negligible.

Recently, the National Development and Reform Commission (NDRC) announced that it would release the central reserves of frozen pork locally to curb the surging prices. At present, how much the central reserves can be released remains to be a heated topic. However, relevant experts believed that the existing inventory is relatively small that its effect on the fresh pork market is basically negligible.

 

Typically, there are two channels for pork reserves: the central reserve and the local repository model. As for the central reserve, the authority has carried out thirteen rounds of purchases so far this year, mainly targeting 50 pig slaughtering enterprises, and the products are pork boneless picnic shoulder and pork leg. This channel will release frozen pork reserves to downstream processing plants, which will not affect the fresh pork market.

 

Local regions have fixed reserve volumes every year, yet with little amounts. Mainly two forms of the local reserves: the large-scale and qualified slaughtering enterprises to purchase and store on their behalf; and traders import from abroad to store.

 

For the first method, each province ensures stable storage amounts of around 15,000 tons. The slaughtering company does the store by itself, thus its stock and reserve volumes are often overlapped. Moreover, traders’ import amount for storage are also modest.

 

Based on our previous statistics, the central government hasn’t obtained satisfactory results of thirteen central reserves before, with only 90,000 tons collected from Jan to May this year. Pig prices have bottomed out since April, because pre-orders gradually arrived in ports (at least 2.5 months taken). In the first half of the year, pork quantity arriving at ports were not large, with one-third average monthly pork consumption of that in the same period last year.

 

Therefore, from the perspective of these two channels, current reserves may have relatively small volumes that can be put into the pork market.