Pork Prices Fall 6.5% In The World's Largest Pork Market

The decline in Chinese pork prices continues.

After falling 5.5% year-over-year in March, pork prices fell 6.5% in April in the world's largest pork market.

On a monthly basis, pork prices were down 6.1% in April, compared with 9.1% the previous month.

Oversupply has been one of the biggest factors behind the decline in pork prices.

Bank of America's Ting Lu previously attributed the decline to four key reasons:

1. Sow breeding inventory being at historically high levels.

2. No cases of swine flu affecting supply, despite the dead pigs found floating in Chinese rivers.

3. Pork demand being impacted by the government's crackdown on corruption, 'gift giving', and excesses that have hit the catering industry and high-end restaurants.

4. A decline in corn prices, a key feed grain for pigs.

Recently two farmers were arrested after they sold 40 tonnes of diseased pork over a three month span. The South Morning China Post reported that they had been hired by Fujian province's government to dispose of pigs that had died from pseudoradbies or the "highly infectious" blue-ear pig disease. It is unclear if instances like this or that of the dead floating pigs will have any impact on pork demand.

The hog-to-corn price ratio was already below the break-even level of six earlier this year. So, Lu does expect the excess supply to decline and pork prices to pick up again in late 2013.