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Pork Price Continue to Drop Despite Govt Intervention

by 5m Editor
23 May 2012, at 7:05am

CHINA - China's pork prices continued to fall 1 percent last week despite the government's move to purchase frozen pork from the market in order to boost national reserves, the Ministry of Commerce (MOC) said.

Weak pork prices last week sealed an accumulated decline of 15.7 per cent and marked the 16th consecutive week of declines, the MOC said in a market monitoring report on its website.

The hog-to-corn price ratio, a major indicator of pig farmers' profitability, has fallen below 6 for the last five weeks due to cyclical fluctuations, according to the National Development and Reform Commission, China's top economic planner and price regulator.

A reading above 6 is considered the break-even point for pig farmers, thus, the current ratio suggests they are generally seeing losses.

Prices of other farm products also extended weaknesses last week, with the wholesale price of 18 types of vegetables declining 6.1 per cent week on week for the week ending on 20 May, according to MOC data

Cucumbers led the price decline by tumbling 13.7 per cent week on week.

The MOC report showed that the prices of major industrial raw materials also slid last week, giving policy-makers more room to loosen tightening measures in order to stabilize economic growth amid easing inflation.

Pork prices make up a large part of food prices, which account for about one-third of the weighting in the calculation of the consumer price index (CPI).

China's CPI growth eased to 3.4 per cent in April, retreating from 3.6 per cent in March.

Inflation has remained a major concern for the Chinese government in recent years, and the volatile swine market has complicated the government's price control efforts.

As pork is the most widely-consumed meat in China, pork prices were the main driver of last year's sky-high CPI figure of 5.4 per cent, which was well above the government's control target of 4 per cent.

However, Chinese Premier Wen Jiabao said over the weekend that the government needs more attention to stabilizing economic growth amid the current slowdown.

Further Reading

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