CME: Outlook for China Pork Demand Focus of Market Speculation26 July 2013
US - Pork exports and the outlook for China pork demand has been the focus of market speculation in recent months, particularly after the sale of Smithfield Foods to the Chinese meat producer Shuanghui International Holdings Ltd, write Steve Meyer and Len Steiner.
However, rising incomes have given the Chinese consumer a new found appreciation for the taste of beef. Beef demand and prices have exploded in recent years.
According to a July report prepared by Meat and Livestock Australia, retail pork prices in China currently are running at a little over 20 RMB/kg, similar to where they were in the second half of 2007 and below the 30 RMB/kg that was registered in the summer of 2011.
That surge in domestic pork prices caused Chinese importers to sharply increase their buys of US pork at the time. Boneless beef prices, which in 2007 were also hovering around 20 RMB/kg, now are trading at near 60 RMB/kg, with prices steadily increasing from one year to the next.
The latest exchange pegged 60RMB = $9.78. Chinese home beef consumption remains limited, as the Chinese consumer is much more comfortable cooking pork and, to a lesser extent, chicken.
However, rising incomes have provided the consumer with the ability to eat out more and the proliferation of foodservice operations has provided a boost to beef consumption in the country.
From Korean barbecue to American-style fast food the Chinese consumer is now spending a lot more of their disposable income on beef.
ThePigSite News Desk