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(Bloomberg) — The fall holidays in China are usually boom-time for pork consumption, as parties and cooler weather entice households to splurge on the nation’s favorite meat.

The Mid-Autumn Festival on Friday typically gathers friends and family over celebratory fare like braised pork belly or sweet and sour ribs. This year, the lunar holiday is followed in short order by the weeklong National Day break, which should extend demand for the more expensive meatier dishes beloved by Chinese.

But consumption is falling flat and supplies are ample. Much of the blame lies with a weak economy and financial uncertainty that to some degree has affected all of China’s commodities markets. Prices of hogs and pork, which usually rise in anticipation of shoppers opening their wallets, have actually fallen. It’s a troubling sign for an industry that has yet to recover from the constraints imposed by the pandemic.

“Pork is selling poorly,” said Yao Shangli, a wholesaler based in Shanghai supplying restaurants in the city. “Look at the economic situation now. The economy is bad. There’s no demand. There wasn’t a wave of stock-building before the holiday either,” he said.

Chinese pork consumption is nearly five times that of 40 years ago, mirroring the rise of the middle classes. But even relatively well-off households are watching the pennies as the economy slows and a protracted property crisis saps confidence.

The impact will be felt as far afield as the Americas, whose farmers supply most of the animal feed for China’s vast pig herd. There’s also a direct impact on financial markets because of the meat’s weighting in the basket of food monitored by China’s central bank, with a drop in pork prices contributing to deflationary pressures in the economy.

In the wet markets of Guangdong in southern China, sales of fresh pork have been slow, said Citic Futures Co. Meat that should have sold out in the morning was still sitting on shelves in the afternoon, according to a report from the broker at the weekend.

Slaughter Rates

Hog prices nationwide have dropped over 5% so far this month, and wholesale pork prices have also turned lower. Slaughter rates at abattoirs are flat.

Carcass sales have slowed and slaughterhouses aren’t getting many orders, according to commodities consultancy Mysteel, which cited the impact of the sluggish economy.

“This round of restocking for the holidays is basically over and demand didn’t really kick off,” said Zhu Di, an analyst with GF Futures Co.

Demand for cured pork usually rises toward the end of the year and that could give the market a boost, according to Zhu. “But I’m not sure how much it will be,” she said. “There’s too much supply. We are quite pessimistic about prices in the fourth quarter.”

That puts Chinese farmers in a bind. Profitability is already lagging pre-pandemic levels, due to a combination of oversupply, weak demand, high feed prices and the costs of fending off diseases like African swine fever.

With hopes dashed this time around, the focus will switch to the run up to the next festival period around Lunar New Year — the period of heaviest demand for pork in the Chinese calendar.

The Week’s Diary

(All times Beijing unless noted.)

Thursday, Sept. 28

• China weekly iron ore port stockpiles
• Shanghai exchange weekly commodities inventory, ~15:30
• China Intl Aluminum Week in Yinchuan, Ningxia, day 3

Friday, Sept. 29

• China’s Mid-Autumn Festival holiday

Saturday, Sept. 30

• China’s official PMIs for September, 09:30

Sunday, Oct. 1

• Caixin’s China PMIs for September, 09:45

On the Wire

Saudi Aramco will start talks to buy a 10% stake in a Chinese refining and petrochemical company, as it looks to boost its presence in the world’s biggest energy importer.

©2023 Bloomberg L.P.

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