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07

2023

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06

Henan Province Takes the Lead in Pork Reserve

Source:

OIG Research

On June 5th, Henan Province issued the "2023 Provincial Pork Reserve Work Plan" to promote the stable development of the pig industry, ensure the smooth operation of the market, enhance market regulation measures, and effectively respond to abnormal fluctuations in the pork market.

 

On June 5th, Henan Province issued the "2023 Provincial Pork Reserve Work Plan" to promote the stable development of the pig industry, ensure the smooth operation of the market, enhance market regulation measures, and effectively respond to abnormal fluctuations in the pork market.

 

Henan is a major agricultural province in central China. The Henan’s market has always been a key focus for monitoring pork prices in the industry. Many leading Chinese pig farming enterprises have their production capacity concentrated in Henan. 

 

According to the plan, the provincial pork reserve for 2023 is set at 3,350 tons, with a reserve period of one year (from August 2023 to July 2024), and the reserve category is frozen pork. The provincial pork reserve is established by the provincial government to regulate the balance of pork supply and demand in the province, stabilize the pork market supply, and cope with major natural disasters, public health incidents, animal epidemics, or other emergencies that cause abnormal market fluctuations. The reserve is implemented through government subsidies, enterprise reserves, participation in regulation, market operations, and self-financing, with the government having priority access rights.

 

According to the price changes in the important production materials market in the circulation sector released by the National Bureau of Statistics on May 24th, the price of live pigs (DLY) was 14.2 yuan (US$1.99/kg, USD/CNY=7.1197) per kilogram, a 1.4% decrease compared to the previous period. Huafu Futures pointed out that due to the current oversupply of production capacity and the persistently high prices of piglets, it is difficult to effectively reduce the capacity. The impact of ASF in the southern region is limited, combined with high frozen product inventory, resulting in the significant overall supply pressure. Weak consumption is influenced by factors such as consumption substitution and ongoing economic recovery.

 

Based on data from the Ministry of Agriculture and Rural Affairs, the current coverage of the rising production cycle is still ongoing, and pig supply is expected to continue to grow in the next two months. The consumption market for live pigs is currently lukewarm. Further price declines may reignite the initiative of slaughter enterprises to actively stockpile. However, considering the relatively high levels of frozen product inventory for slaughter enterprises and the pressure on funds, there is limited room for further stockpiling operations in the later period. Overall, it is expected that the market in June will continue to show a downward trend with fluctuations.