China opened a new round of strategic pork stockpiling in an effort to lift domestic prices from their lowest point in nearly four years. Because of its perishable nature, China usually maintains a reserve of less than 1% of the country’s total annual consumption of 53 million metric tons. To reserve enough pork to actually force a price change would be logistically too difficult so the pork bank is used by the government more to encourage market to follow the official action rather than as an outright price control. Over the past seven years the Chinese government has often intervened in the pork market to either control run-away prices of a staple food, or to support prices to protect rural livelihoods. The latest stockpiling measure of 65,000 tons happened in March but did not have any effect upon the falling prices. Beijing’s goal is to keep prices where hog farmers can break even. To achieve this, hog prices need to be six times that of grain. The current ratio is 4.64 – 1, prompting the second reserve intervention. In the first half of 2013, the Chinese government intervened twice, helping prices to increase 14% between May and September.
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