China's pork prices are being kept in check even as pig production continues to drop, with tough new rules on slaughterhouses crimping trade and pushing frozen pork stocks onto the market, according to analysts.
Hog prices in the world's top producer rose sharply in early March as losses from an epidemic of incurable African swine fever started to impact supplies.
Price Declines
The prices levelled off in mid-March, however, and in many areas have declined in May, confounding anticipation of a rapid rise in pork prices after widespread culling.
That's because Beijing has rolled out new rules requiring slaughterhouses and processing plants to test for the African swine fever virus, slowing down business at many facilities and denting demand.
"The government is checking slaughterhouses, cold storage warehouses and processing firms so nobody dares to buy pigs, kill pigs or sell meat. Live hog demand is fairly poor," said Feng Yonghui, chief analyst with Soozhu.com.
African swine fever does not harm people but to help curb spread of the disease, the Ministry of Agriculture and Rural Affairs on March 15 ordered slaughterhouses to test each batch of hogs for the virus.
Larger facilities needed to install testing equipment by May 1, and all processors must comply by July 1. The ministry has said it will carry out inspections to check up on them.
Frozen Sales
Some slaughterhouses have been selling off frozen pork ahead of inspections, said Pan Chenjun, senior analyst at Rabobank.
There is always the risk that pigs slaughtered previously may have had the virus.
"Nobody can be very sure that their meat is 100% safe," Pan said.
A follow-up order from the agriculture ministry in early April, outlining requirements on traceability and inspections in processors has further dampened trade, Feng said.
The overall impact on demand means pork prices are not rising much either, even though they are up sharply compared with last year's low levels.
News by Reuters, edited by ESM. Click subscribe to sign up to ESM: European Supermarket Magazine.
