Pork is flying in China as consumers dodge chicken

Business

Pork is flying in China as consumers dodge chicken

Share price of local KFC operator Yum China plunges but shortage of pigs turns demand strongly bullish

FT.com

Food prices are soaring in China. Stockpiling has now shifted from surgical masks to all kinds of groceries. Even without the hoarding, food supply has suffered from disruptions because of the deadly coronavirus. Food prices rose by more than a fifth in January. Overall inflation is at 5.4%, the fastest pace in eight years. 

Pork prices provide an unofficial measure of future inflation in China, the world’s largest consumer of the meat. Before coronavirus, African swine fever had already squeezed supply. In January, prices rose 116% to just shy of a record high. A combination of prolonged business closures, lockdowns and factory suspensions only tightens the supply chain. Pork prices should stay on an upward trend.

All this has been bad news for restaurants, already hit by a sharp drop-off of visitors, staying at home either by choice or enforced lockdowns. Share prices of local KFC operator Yum China and hot-pot restaurant chain Haidilao are down about 15% since mid-January. Shares in the latter’s rival, Xiabuxiabu, are down more than 30%. Operating profit margins, already falling for the two local chains since 2017, could slide further...

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