context: MARA has already estimated pork prices will rise 70 percent in H2 2019 due largely to African swine fever. This estimate is likely conservative, and policymakers are now expressing some concern over managing CPI. Many pork-related stock prices have doubled, reflecting high expectations for large, publicly listed companies as smaller players are crushed by the disease.
Wei Baigang 魏百刚 Ministry of Agriculture and Rural Affairs (MARA) development planning department director reiterated expectations that pork supply will be limited in H2 2019 and prices will rise significantly. Citing African swine fever (ASF) and other international and domestic economic factors, Wei notes live pig and breeding sow population has fallen over ten percent each month for three consecutive months. Though Wei insists the rate of new reported ASF cases has slowed, population is expected to continue falling. Wei notes pork is the largest food-related category in CPI, and policymakers' attention has turned to ensuring supply capacity and controlling price increases within a manageable range.
Pig-related stocks have jumped substantially, reports Yicai, with an index of 'pork concept stocks' trading the highest of any domestic index. As of 21 April, the index was up over 95 percent y-o-y, while the Shanghai Composite index is up just over 31 percent. Ten of the 23 pork stocks that comprise the index have doubled in price y-o-y, with Xinwufeng up over 300 percent y-o-y.
The pig cycle's turning point has passed, say multiple securities analysts cited by Yicai, and high prices may be expected for the next two to three years. Since 1995, there have been six rounds of the pig cycle in China, with the turning point usually taking place in Q2, and highest prices usually occurring in September. Swine fever has kicked off previous rounds of the cycle, reducing population and driving prices up.