Bearish pork price; Wheat auctions; US net sales to China

Pork price outlook bearish amid lockdowns despite more state buying

The prospect of pork prices in China is likely to remain bearish in the second half of 2022 as the oversupply of hogs and overall weaker pork demand will continue to dictate market sentiment.

As hog producers in China further trim their hog herd at an average rate of 20 million hogs per month, the domestic market will have a monthly pork supply of roughly 1.56 million tons.

Market experts in China expect oversupply to stay at least throughout the second quarter of this year as demand lags.

Due to the recent rebound of Covid cases in the country and various lockdowns across different regions, pork consumption has been negatively impacted.

Restaurant turnout rates and consumer spendings in the catering industry have tanked since the end of the Lunar New Year holiday in mid-February this year. Moreover, disruptions of Covid-related lockdowns further slashed pork demand as food deliveries have become lengthier and more difficult than usual.

Meanwhile, the government has ramped up purchases of pork within the domestic market to restock national reserves.

The third round of purchases has been scheduled for this weekend (April 2-3) with a buying target of 40,000 tons.

The state stockpiler has bought 78,000 tons of pork from private Chinese companies in 2022 so far, and is expected to continue buying in an attempt to support pork prices.

However, the impact of state interventions on pork prices has been largely offset by huge supplies of pork each month.

Wheat auction prices fall despite stable demand

China auctioned a total of 548,000 tons of wheat in the most recent auction of national reserve wheat.

97% of the available supplies were bought by the market, with an average price of 2,857 yuan per ton ($451/ton). This was down 27 yuan/ton compared to last week.

Auction participation remains high, although prices have fallen the past two weeks.

Henan province, China’s largest wheat producer, offered 436,000 tons. 100% of the available supplies were purchased by the market at an average price of 2,887 yuan/ton ($454/ton).

US soybean net sales to China surge, sorghum volume slumps

US net export sales of 2021/22 soybeans to China during the week of March 18-24 spiked compared with the previous week, according to USDA data.

The volume jumped more than ten folds week on week to 593,200 tons last week, followed by unknown destinations (520,700 tons) which are suspected to be also for deliveries to China.

For 2022/23 marketing year, there were no new sales to China last week.

On the contrary, net sales of US sorghum to China during the week plunged to 50,800 tons, more than halved on the week.