China sees a sharp fall in pork prices amid fears of deflation

The national average live pig price also fell to US $2.08 /kg, a significant decline of 36.7% YoY. Regional differences were apparent, with prices for live pigs rising in some provinces but falling in regions such as Ningxia and Inner Mongolia. Southwest CHINA reported higher prices of US$2.19/kg, in contrast to Northern China , which reported lower prices of US$2.01/kg.

China's economy faces the risk of deflation as pork prices, a key component of the consumer price index (CPI), fell significantly by 31.8% year-on-year in November this year due to oversupply. Chinese consumers are turning to beef as a healthier alternative, with 28% expressing plans to reduce pork consumption. Falling pork prices coupled with a 0.5% year-on-year decline in the consumer price index, the largest in three years, are raising concerns about deflationary pressures. Pork prices have a significant impact on China's CPI, and the decline could exacerbate deflation risks, potentially creating a cycle of deferred consumer spending and investment. China's pork production hit an eight-year high in 2022, leading to oversupply and a long period of losses in the pig production cycle, highlighting the longest decline since records began.

But the recent decline in pork prices in China presents both challenges and opportunities. However, the risk of deflation in China, highlighted by a significant 31.8% year-on-year decline in pork prices, requires caution. Importers should consider diversifying their beef supply portfolio given the consumer shift toward healthier protein alternatives. Monitoring pork production trends in China is critical to mitigating risks.