In this file:

 

·         Pigs Will Fly Before China Solves Pork Inflation

Price volatility is the result of a reliable boom-bust cycle driven by breeding patterns. Derivatives won’t help.

 

·         Chinese Officials May Be Covering Up the Extent of the Swine Fever Outbreak

The disease, which is not harmful to humans, is said to have spread to almost every Chinese province, plus parts of East and Southeast Asia.

 

·         China reports African swine fever outbreak in Hubei province

… China has reported more than 140 outbreaks...

 

 

 

Pigs Will Fly Before China Solves Pork Inflation

Price volatility is the result of a reliable boom-bust cycle driven by breeding patterns. Derivatives won’t help.

 

By David Fickling, Bloomberg Opinion

July 10, 2019

 

This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.

 

Chairman Mao’s favorite meal is looking a lot more expensive these days.

 

The price of Chinese pork – used to make a sweet-spicy-fatty dish beloved by the country’s former leader – surged 21% from a year earlier in June, the National Bureau of Statistics reported Wednesday.

 

The bureau doesn’t break down the weightings of different products in the basket used to calculate its key inflation measure, but pork has probably played a part in the consumer price index reaching 2.7%, close to its highest level in five years (the core CPI measure, which excludes food and energy prices, is looking distinctly subdued).

 

Food is the biggest element after housing in the CPI, according to estimates by Bloomberg Economics analyst David Qu, and pork is the largest slice of that pie, amounting to about 2.5% of the total inflation basket.

 

Pig meat makes up a smaller share of the total than it did in the past as the bureau adjusts to reflect China’s increasingly affluent economy, but a 50% rise in prices would still add 1.2-1.3 percentage points to inflation, according to Qu’s numbers. Such a dramatic increase isn’t as improbable as it may seem: Despite the effects of a trade war and a cull of around a fifth of China’s hogs, the latest spike looks relatively modest.

 

Compare what’s happening now with 2016, for instance, when pork prices climbed 34% in May; or 2011, when they jumped 57% in June; or 2007, when the increase in August from a year earlier peaked at 87%. In that light, the current jump is little more than a blip.

 

The fact is, Chinese pork prices are notoriously volatile. There’s even a well understood reason for this, which tends to result in a recognizable four-year cycle of boom and bust. When pork prices are high, farmers try to raise more piglets. When they’re weak, sows are slaughtered to stop them from producing too many more.

 

The process takes about 18-20 months in China, according to a 2012 study for the U.S. Department of Agriculture, meaning the trough when prices fall into deflationary territory is a more or less direct result of the peak that caused farmers to breed so many pigs in the first place – and vice versa.

 

One answer would be to try to keep pigs alive longer and ride out the weak patch in the market, but margins are tight in hog farming. The odds of incurring a loss go up sharply if you’re buying additional months of feed in the hope that prices will rise.

 

Another idea that China has tried since the 2007 price spike is to keep a mountain of frozen cuts on ice and buy and sell to stabilize prices, in the same way that the U.S. strategic petroleum reserve is used to take the swings out of the crude market. Judging by the performance of the pork market since then, that hasn’t really worked; one 2016 paper found that volatility had increased, not decreased.

 

One final expedient would be to rely on imports, but even that approach has problems. China, after all, consumes almost half the world’s hogs; if you cull a fifth of the herd, the entire volume of global pork trade won’t be sufficient to plug the gap. That’s especially so considering the world market is bifurcated between a U.S.-led group that accepts meat raised with the growth drug ractopamine and another led by China and the European Union that bans it.

 

What else could be done to stabilize this chaotic trade? One idea...

 

more, including links, charts

https://www.bloomberg.com/opinion/articles/2019-07-10/china-s-volatile-pork-prices-pose-inflation-headache

 

 

Chinese Officials May Be Covering Up the Extent of the Swine Fever Outbreak

The disease, which is not harmful to humans, is said to have spread to almost every Chinese province, plus parts of East and Southeast Asia.

 

by Meera Navlakha, VICE

10 July 2019

 

For almost a year now, African swine fever has plagued pig populations in China to the point where it has been declared a national crisis. Now, an investigation by Caixin Global reveals a far more distressing case: many of the swine fever outbreaks are being covered up by local authorities and we have yet to see its true extent.

 

Caixin Global, the news site of the Beijing-based financial media corporation, has published a report adding a whole new layer to the ongoing crisis. According to their findings, local governments throughout the country are underreporting cases of African swine fever – which is fatal to pigs but not known to harm humans – and ignoring potential cases of the disease.

 

Farmers also told Reuters that many of these outbreaks are being covered up. This is, in part, due to local officials who are resistant to verifying the disease to avoid paying the required compensation to pig breeders. These breeders are entitled to 1,200 yuan, or approximately $180, per slaughtered pig.

 

The Caixin report states that even the richest of Chinese cities may not be able to afford the compensation they would have to deliver. Rural provinces will struggle even more. If local officials were to verify every case, they would be paying millions of yuan as compensation to breeders.

 

This has led breeders to sell their pigs off as quickly as possible – whether they're infected or not.

 

Chinese authorities, meanwhile, are claiming that the number of African swine fever cases have decreased. In a press briefing, Vice Minister of Agriculture and Rural Affairs Yu Kanghzhen emphasized that there were only 44 new cases in 2019. But the underreporting may be skewing these numbers.

 

“When it comes to the underreporting of the disease, though we can’t guarantee zero cases [are not reported], we will definitely have zero tolerance for it,” Yu said.

 

China has over 440 million pigs, which is half the planet’s total. The disease is said to have spread to almost every province in China and, worryingly, to other parts of East and Southeast Asia, according to a report by the United Nations. New outbreaks have been disclosed from Vietnam, Cambodia, and Myanmar.

 

The DNA virus is equipped with many genes and proteins that are particularly effective at fending off a pig’s immune system. This makes it notoriously difficult to fight, according to a Bloomberg report. In May, Chinese state media revealed that government research teams will begin conducting trials on a potential vaccine to battle the disease.

 

Beijing admitted in July that there were “weaknesses” in the handling of the epidemic. This was cited by many media outlets as a rare admission of failure on the part of the Chinese government.

 

The first case of African swine fever was declared in August 2018 in China’s northeastern city, Shengyan...

 

more, including links

https://www.vice.com/en_in/article/bj94w8/chinese-officials-may-be-covering-up-the-extent-of-the-swine-fever-outbreak

 

 

China reports African swine fever outbreak in Hubei province

 

Reporting by Dominique Patton; editing by Christian Schmollinger, Reuters

via KFGO (ND) - July 11, 2019

 

BEIJING (Reuters) - China confirmed a new outbreak of African swine fever in Hubei province, the Ministry of Agriculture and Rural Affairs said on Thursday.

 

The disease, which kills almost all pigs it infects, occurred on a farm of 102 pigs in Tuanfeng county in the east of the province.

 

China has reported more than 140 outbreaks...

 

more

https://kfgo.com/news/articles/2019/jul/11/china-reports-african-swine-fever-outbreak-in-hubei-province/916864/