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Chinese Government's Pork Reserve Will Have Little Impact on the Pig Price




According to the National Development and Reform Commission (NDRC) on the 29th, many important festivals such as the Mid Autumn Festival, the National Day, the New Year's Day and the Spring Festival will appear in the future. In order to ensure the supply of pork during the holidays, the NDRC and relevant departments will launch the government pork reserves in batches from Sept.


From the beginning of this year, the NDRC has carried out 13 batches of state reserves of frozen pork in H1, planning to purchase a total of 518,000 tons, while only 101,400 tons were actually auctioned, which is average amount of frozen pork reserves, having minor influences on the market with fewer amounts to be released in H2.


Since Aug, the price of live pigs has been surging, but the operating rate of slaughtering enterprises has hardly significantly increased. As of 25th, the average price of domestic and DLY live pigs was 22.32 yuan/kg, down 6.22% from the peak on Jul 5. The average monthly price in Aug was 21.60 yuan/kg, down 2.22% MoM. Although the price of pigs has shown an upward trend, the monthly average price has decreased MoM.


With the approach of the Mid Autumn Festival, the pig price has an upward trend. But it seems that under the constraint of supply, the pig price may be difficult to break the peak in Jul.


So we conclude that the state reserve in Sept will have limited impact on the supply and demand pattern of pork, and could not completely reverse the overall trend of upward fluctuation of pig prices before the end of the year. State reserves are more of a means for the Chinese government to regulate the meat market, boosting the confidence in the market and reducing losses of farmers and slaughtering houses by providing subsidies, rather than having a great impact on the pig prices.