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Oversupply drives down pork prices in April

(Xinhua)
Updated: 2009-05-08 15:32

BEIJING -- Pork prices in China further dropped in April due to over market supply and falling demand, analysts said on Friday.

Statistics released by the National Development and Reform Commission (NDRC) on Thursday showed pork prices in major Chinese cities averaged 10.13 yuan per kg (US$1.5) at the end of April, down 10.4 percent from the same period last year.

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The decline led the proportion between pork prices and grain prices to stand at 6.18 to 1, the lowest point since May 2007, gaining on the threshold for hog breeders to earn profit set by the NDRC, which is 6 to 1.

The government will enforce subsidies for the pork production industry if the figure falls below 5 to 1.

Farmers had been raising more hogs since the pork prices began to climb up in the first half of 2007. It may be the major reason for over market supply and price drop since this year, Wang Xiao'e, economic researcher with Beijing Economic Information Center told Xinhua.

Pork prices were also affected by the falling demand in summer, when people tend to eat fewer pork products, said NDRC in a statement posted online late Thursday.

The A/H1N1 flu was also a factor that made people more cautious when choosing meat for meal, according to Wang.

The continuous price fall has already aroused concerns for further drop in CPI (Consumer Price Index) later this year, as the prices of pork, a major meat on Chinese families' dinner table, is a main drive behind CPI changes.

"It will impose large pressure on the country's CPI if the downward trend in pork prices continues," said Wang.

Food prices, a major component of China's CPI, fell 0.7 percent year on year in March, with pork prices down 23 percent.

March's CPI dropped 1.2 percent from a year earlier, falling for a second month this year. Figures for April is expected to come out next week.