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Chinese pork price woes impact global agriculture and trade

Chinese pork prices continue to hover at low levels, with little relief in sight. This prolonged situation is causing significant challenges for Chinese pig farmers and has far-reaching implications for global agricultural markets. The consequences are also raising concerns about inflation in Asia's largest economy. 

A surplus of hogs and reduced consumption due to a slowing economy are contributing to the ongoing price slump. Even as the winter peak demand season approaches, the market is expected to remain under pressure.  

It may take until the second half of the next year for prices to recover, spelling bad news for various agricultural markets, especially for meat exporters and grain farmers in the Americas who supply China's extensive pig herds. 

The impact of China's pork industry extends beyond agriculture; it also affects the broader financial markets due to pork's significant weight in the basket of goods used to measure inflation in China. 

The number of sows for breeding, a crucial factor in predicting future pork supply, stood at 42.4 million at the end of September. While this number reflects a 1.3% decrease compared to the previous month, it remains above the 41 million considered an optimal herd size by the farm ministry. 

Simultaneously, the USDA's Economic Research Service reports an increase in China's soybean crush for the upcoming years, which may partly be attributed to the challenges faced by the pork industry. Despite lower soybean imports in recent years, higher crush volumes are anticipated, leading to a reduction in China's soybean ending stocks. 

China's soybean meal production is also on the rise, driven by increased soybean crush. Domestic soybean meal consumption is forecasted to grow, thanks to a modest recovery in the livestock sector. 

China's strong demand for sorghum from the United States continues, with China accounting for most U.S. sorghum exports. Recent data shows a heavy reliance on China's sorghum purchases, emphasizing the importance of this trade relationship. 

Source : illinoisagconnection

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