MONTHLY ASIA PORK WRAP: Pork belly prices reach near three-month lows as demand wanes

Platts assessed the CFR North Asia pork belly price at $5,195/mt on June 30, down $554/mt, or nearly 10%, from the late-May assessment. The June 30 assessed price was the lowest since March amid sluggish demand from major North Asian buyers.

In June, market participants in South Korea and Japan witnessed a decline in demand for pork amid a challenging economic environment and high inventory levels.

Prices dropped 9.6% compared to the previous month, reversing the gains made earlier this year, and market sources expect the markets to weaken further.

South Korea's pork imports in May stood at 56,250 mt, particularly for bellies, butts, and collars, yet consumption remained weak, according to a local buyer. The domestic economy continues to struggle, leaving importers hesitant and unable to make swift purchasing decisions.

Sources also indicated that this trend is mirrored in other Asian countries, highlighting a broader regional phenomenon.

In Japan, buyers indicated an oversupply of pork bellies, leading many to offload their stocks at prices ranging from Yen 700-730/kg, with some even dropping below Yen 700/kg.

"Consumers are opting for more affordable pork cuts like collar and shoulder, or even choosing chicken as an alternative protein source," a source said.

As a result, interest in future shipments of pork bellies is declining due to uncertainty in consumption patterns and significant discrepancies between ideal buy and offer prices. The elevated inventory levels further worsened the situation.

Meanwhile, in China, the hog-to-corn ratio declined by an average of 1.5% week over week in the first two weeks of June, while corn prices saw a modest increase of 0.4%. CFR China first-month soybean prices surged 5.8% in June to $460.4/mt, according to Platts assessment.

As hog prices continued to weaken compared to corn and soybeans, producers may face tightening margins, according to S&P Global Commodity Insights.

The African swine fever in the neighboring Vietnamese market has driven live pig prices up nearly 27% due to supply shortages, reaching approximately Dong 70,000/kg, according to market sources.

Vaccination efforts to control ASF in Vietnam have been largely ineffective, echoing the challenges faced in the Philippines, as reported by industry participants. As a result, Vietnam primarily sources its pork from Russia, benefiting from nil tariff, while Brazil faces a competitive disadvantage with a current 10% tariff on its exports.

Singaporean buyers saw improved interest in pork as prices began to cool off and inventory levels remained low. The lower stockpiles could be attributed to previously elevated pork prices, discouraging many buyers from purchasing. Additionally, sources acknowledged that the current pork market is under significant stress.