2020-07-03

Chinese Pork Prices Rising at 500pc Annualized Rate

Chinese pork prices are up nearly 17 over the past 5 weeks.

iFeng: 短暂降价后猪肉批发价现五连涨,这次又是因为啥?
Last week (June 22-28), the wholesale price of pork was 44.66 yuan per kilogram, up 2.9% from the previous week. In addition, the wholesale pork prices for the week of June 15-21, June 8-14, June 1-7 and May 25-31 were up 5.1%, 3%, 3.8% and 1.1 respectively from the previous week %.

Overall, the wholesale price of pork last week was directly increased by 16.79% from the 38.24 yuan/kg before the price increase. Data from the Ministry of Agriculture and Rural Affairs also showed that the national average wholesale price of pork was 45.74 yuan/kg in July, a year-on-year increase of 93.4%.
Why are pork prices rising?
Fu Yifu, a senior researcher at Suning Financial Research Institute, explained to the Beijing News reporter at Shell Finance that the swine fever rebound, blocked pork imports and heavy rains have led to rising transportation costs as the three main reasons for this round of pork price increases.
Inflation is latent until a spark is lit in a credit money system. In a fiat system where cash is being given out, inflation is almost immediate. In a financialized credit system, the financial markets act as a giant filter soaking up new credit. Creating new debt to pay off old debt, for example, can even cause deflationary behavior because it pushes more people towards bankruptcy.

At least one analyst sees a new permanently high plateau for pork prices:
So, will subsequent pork prices continue to rise?

According to the opinion of Guojin Securities Research, as the current price correction rate of pigs is basically the same as the improvement of the leading indicator of pig stocks, considering the seasonal factors, there is less room for the decline of pig prices in the third quarter. After the short-term supply and demand mismatch has eased The average pork price is expected to fall slightly. From the perspective of the number of capable sows, there is still some downward space for the price of pigs in the fourth quarter. If the adjustment of the price of pigs by the end of the year is the same as that of the leading sows, the price of pigs will be at 35 In the range of -40 yuan/kg, the price is unlikely to fall back to the 20 yuan era.
If there is going to be inflation as a result of the coronavirus pandemic, broken supply chains and government/central bank response, something like pork prices in China (and soon after the rest of the food sector) is where it should emerge. If China can't get inflation going in these conditions, the inflation narrative is still broken after 11 years.

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