(Yicai Global) June 28 -- China’s macro-economic planning agency is calling on the central and local governments to start stockpiling pork and halt an alarming slump in prices, after the average hog-to-grain price ratio fell under five last week, well below the level needed for farmers to break even.
The ratio between live pigs and grain prices was 4.9:1 between June 21 and June 25, the National Development and Reform Commission's Department of Price said today. This caused the commission to issue a Level-One warning, the first time that such an alert has been given. On June 16, a Level-Three warning was sent out when the ratio fell below 6:1.
Central and local governments will start buying and reserving pork to shore up the price of pork, the NDRC said. The reason for the plunge in prices is due to the recent slaughter of many large hogs, an increase in pork imports and weaker seasonal demand, it added.
Pig prices will bottom out this week, the NDRC said. The ratio will fall to 4.34:1 this week, down 9.39 percent from the previous week.
Farmers are now losing around CNY804.38 (USD124.60) per pig, based on these prices. It generally takes 10 months to raise a hog for slaughter. Future prices remain very uncertain with the unsure outlook on diseases, supply and demand and feed prices over this lengthy period.
Poultry breeders are also facing losses of around CNY1.64 (USD0.3) per bird as the price of chicken also continues to slide. The chicken to feed price ratio stood at 2.17:1 between June 21 and June 25, a drop of 7.26 percent from the previous cycle, according to the NDRC.
Not many chickens will be slaughtered in the near future and the demand side is also not good as there is no obvious sign that end consumption will improve, it added.
Editor: Kim Taylor