Ping An Digital Economic Research Center (DERC)

Ping An - DERC

Ping An Digital Economic Research Center (DERC) utilizes more than 50 TB of high frequency data points, more than 30 years of historical data and more than 1.5 billion data points to drive research on the “AI + Macro Forecast” and provide insights and methods towards precise macroeconomic trends. 

Ping An DERC is a research center for Ping An Insurance (Group) Company of China, Ltd. (“Ping An”) is a world-leading technology-powered retail financial services group. With over 204 million retail customers and 534 million internet users, Ping An is one of the largest financial services companies in the world.

Ping An Digital Economic Research Center

Zheng Zeng

Quantitative Analysis

China Consumer staples / Quantitative Analysis

<blockquote>A follow-up report on our previously weekly report on pork prices from July. </blockquote>African swine fever (ASF) is resurging outside China, but has a relatively small impact on pork prices within China.Domestic supply: We searched livestock sales data for 30 major hog breeding areas in China. The data is quite positive, in the sense that the sales have not been that sensitive to the overseas outbreak. Yet it is worth noting that many farmers in southern China are showing signs of reluctance to sell, which may affect pork supply in the second half of the fourth quarter.Import: Pork supply volatility has flattened as global pork prices marginally weakened due to the COVID-19 pandemic. There has been a change in China’s pork import mix, with the US taking a bigger share. This is affected mainly by international prices and not much by the geopolitical relations between China and the US. China is expected to import more pork from the US as ASF cases are on the rise in Germany.We expect Chinese pork prices to maintain a downward trend in the first half of the fourth quarter, and then stabilize and rise after November.<h3>Looking Back</h3>April forecast: We predicted pork prices in China would rise in April. Pork prices rose by RMB10.2 per 500g in the three months following our April forecast.July forecast: We predicted pork prices in China would plateau and then decline. Pork prices fell by RMB5.2 per 500g in the two months following our July forecast.Figure 1: Domestic pork prices began to fall back after August<figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/166/704/original/image_81251287621603352831835.png?1603352836" class="editor-image img-responsive" data-smartkarma-image-id="166704"></figure><div style="text-align: left;" class="content-caption">Source: Wind, Ping An DERC</div>

A follow-up report on our previously weekly report on pork prices from July. African swine fever (ASF) is resurging outside China, but has a relatively small impact on pork prices within China.Domestic supply: We searched livestock sales data for 30 major hog breeding areas in China. The data is quite positive, in the sense that the sales have not been that sensitive to the overseas outbreak. Yet it is worth noting that many farmers in southern China are showing signs of reluctance to sell, which may affect pork supply in the second half of the fourth quarter.Import: Pork supply volatility has flattened as global pork prices marginally weakened due to the COVID-19 pandemic. There has been a change in China’s pork import mix, with the US taking a bigger share. This is affected mainly by international prices and not much by the geopolitical relations between China and the US. China is expected to import more pork from the US as ASF cases are on the rise in Germany.We expect Chinese pork prices to maintain a downward trend in the first half of the fourth quarter, and then stabilize and rise after November.Looking BackApril forecast: We predicted pork prices in China would rise in April. Pork prices rose by RMB10.2 per 500g in the three months following our April forecast.July forecast: We predicted pork prices in China would plateau and then decline. Pork prices fell by RMB5.2 per 500g in the two months following our July forecast.Figure 1: Domestic pork prices began to fall back after AugustSource: Wind, Ping An DERC

Chinese Pork Prices to Restabilize in Mid to Late Q4