China hog futures post worst week ever on poor demand outlook

Credit: REUTERS/Thomas Suen

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BEIJING, Dec 9 (Reuters) - China's most active live hog futures DLHcv1 ended the week down more than 9%, their largest weekly decline on record, after heavy slaughter and weak demand put further pressure on spot prices.

The contract traded on the Dalian Commodity Exchange closed at 19,000 yuan ($2,733) a tonne, just above the low of early April.

Hog futures began trading in China in January 2021.

Spot prices fell 17% in the last week to 21.4 yuan a kg, according to Shanghai JC Intelligence Co Ltd, giving up all their gains from a rally over the summer, when they hit 28 yuan a kg in late October.

The price plunge comes after producers stepped up slaughter volumes in expectation of improving demand towards the end of the year, and after Beijing urged them to ensure stable supplies.

However, demand, weak throughout the year due to China's strict measures to prevent the spread of COVID has not yet picked up.

"Prices were too high," said Darin Friedrichs, co-founder of Shanghai-based Sitonia Consulting.

"Even a few weeks ago there were people saying there wasn't the usual demand for sausages and curing," he added.

"That was mostly blamed on temperatures being unusually warm. But now temperatures have fallen a lot, and the demand hasn't picked up."

Even as Beijing relaxes its stringent 'zero-COVID' policy, recovery in consumption at restaurants is likely to be slow, said analysts, as many people fearing infection are wary of a quick return to normal habits.

($1 = 6.9512 Chinese yuan renminbi)

(Reporting by Dominique Patton; Editing by Shri Navaratnam and Clarence Fernandez)


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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