DENVER, COLO. – Normal summer lows of pork consumption coupled with China’s hosting the Olympic games is having a significant impact on pork consumption in the country, according to Joel Haggard, senior vice president, Asia Pacific Region, U.S. Meat Export Federation. This lull comes as China’s hog herd has expanded close to double-digit levels year-on-year, with producers responding to strong industry profitability over the past nine months.

U.S.M.E.F. offices in China have pointed out a negative "Olympic impact" on pork consumption. "The effect is more pronounced in Beijing, where tourists have not offset the sharply-reduced local customer traffic in many restaurants," Mr. Haggard said. "Some have even chosen to close for the three-week run of the Olympic games."

Urban clean-up campaigns linked to Olympic events have curtailed street-vendor sales, U.S.M.E.F.-China said. As a result, huge volumes of imported pork and poultry products have stacked up in Chinese cold stores, with some facilities reporting 100% capacity. National distribution of imports has also been affected by the Olympics, as increased security on roadways has slowed product movement. Falling domestic prices have also narrowed the spread between the wholesale prices for imported pork and local products.  

Domestic boneless fresh-pork prices in large urban areas have dropped between 15% and 20% from the high point reached in February 2008, Mr. Haggard said. In late July, China’s ministry of agriculture announced that its total mid-year live hog inventories have increased by more than 9% from year-ago levels. More importantly, sow numbers are up 22.5%.

Although the bullishness of the hog market over the past year may be poised for a reversal, there is a silver lining, he added. China’ s consumer price index dropped to a 10-month low of 6.3% in July. Last month’s increases in food prices, which account for one-third of China’s inflation index, moderated to 14.4%, with meat prices rising 16%. Slower inflation of food prices is welcome relief for China’s leaders, who face headwinds with rising raw material and labor costs, slowing exports and a near collapse of stock prices, Mr. Haggard said.