All Things Food

[Pro-Life]

China Pork Reserves At Risk Of 'Running Out In Months' As Prices Soar
by Tyler Durden - Wed, 09/23/2020 - 22:20

https://www.zerohedge.com/commodities/china-pork-reserves-risk-running-out-months-prices-soar

China could be on the brink of exhausting its massive frozen pork reserves as the country's pig herd is wiped out by African swine fever.

Declining reserves are particularly bad news for the Communist Party of China, which is worried that it might not be able to prevent another destabilizing surge in prices.

For more color on China's strategic pork reserves, Enodo Economics, a London-based consultancy firm, quoted by the Financial Times, said reserves fell by 452,000 tons from Sept. 2019 to Aug. 2020. This means the country's pork reserves are at dangerously low levels.

It's unclear how much of China's latest pork imports have been diverted to state stockpiles - but Diana Choyleva, Enodo's chief economist, said China has about 100,000 tons of frozen pork left in reserves, and "at this rate, within two to three months they'll be out."

FT notes the reserve numbers provided by Enodo are in-line with a recent livestock report via US agricultural attaché in Beijing that said, "pork reserves appear to have been mostly depleted by the third quarter of 2020."

China's pork reserves have been CPC's primary weapon against soaring wholesale pork prices this year - preventing prices from breaching Rmb 50.



As prices continue to climb amid dwindling reserves, the CPC will need to increase imports of frozen pork from the US or Latin America, limiting supplies of fresh pork even further (Chinese consumers typically prefer fresh to frozen, and have been known to be suspicious of China's frozen reserves). As tensions continue to complicate the trading relationship between China and the US, the pork shortage could become one of the most pressing domestic issues facing the world's second-largest economy.