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China to buy pork for state reserves to support prices

China to buy pork for state reserves to support prices

FILE PHOTO: A butcher cuts a piece of pork at a market in Beijing, China, March 25, 2016. REUTERS/Jason Lee/File Photo

BEIJING: China's state planner said on Monday that central and local governments will start buying pork for state reserves to support prices that have plunged in recent months.

Prices entered an "excessive decline" last week, the National Development and Reform Commission (NDRC) said in a notice on its official WeChat account. It did not provide details on volumes to be purchased.

The move comes after live hog prices in the world's top pork producer plunged 65per cent from January to early June, eroding profits for farmers and raising concerns that many would stop farming, triggering shortages later on.

And the hog-to-grain price ratio, an indicator of farmer profits, hit 4.9:1 on average last week, breaching the 5:1 level set by the NDRC to trigger a level 1 warning, its highest.

Shares in China's hog farming companies jumped on the stockpile purchasing plan, even though hog prices had already begun to rise.

Live hog prices bottomed out at 12.9 yuan (US$2.00)per kilogramme on June 21 and have risen sharply since then to reach 17.35 yuan per kg on Monday, according to Shanghai JC Intelligence Co Ltd.

(US$1 = 6.4568 Chinese yuan renminbi)

(Reporting by Dominique Patton; Editing by Himani Sarkar and Muralikumar Anantharaman)

Source: Reuters

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