Spend Matters welcomes this guest post by Mark Kozlowski from Mintec.
Thursday, Feb. 19, 2015 marks the beginning of the Chinese New Year celebrations, which traditionally run for over 2 weeks with various events on each day. In the Chinese zodiac, this year will be the year of the goat or sheep; however one animal that is always closely associated with Chinese New Year is the pig.
From an outside perspective, pork prices this year have been looking good for New Year celebrations as they are currently down 8% year-over-year.
Prices this year have been falling due to increased supply and reduced demand. Chinese pork supplies have boosted supply in the short term after a recent cull of sows (expensive feed prices). The breeding herd has now dropped to its lowest level since it was first reported in 2008.
Pork demand in China is also currently low and is certainly not helped by the long-standing governmental clampdown on extravagance. These initiatives have led to people cutting down on overall consumption of many luxury resources and reducing the number of governmental feasts thrown to exchange these gifts.
So why is this relevant to readers in the US? Well, China is the world’s largest pork producer and consumer, accounting for over 50% of the world’s approximate 110m tonnes of annual production. To meet this demand, China needs to import an extra 1m tonnes of pork per year, also making it the world’s second largest importer. The US is the world’s third largest producer and the largest exporter, with 7% of total US pork exports going to China in 2014.
Currently the import demand from China for US pork is down by 34% y-o-y. So, if this cheaper pork has nowhere else to go, let us hope for some mild weather and we can start hosting some extravagant New Year celebrations of our own.
Happy New Year!