On 10 month 19, the National Bureau of Statistics released economic data for China for the first three quarters: at the end of the third quarter, the national hog inventory stood at 42533 ten thousand head, down 2.6% year on year. Inventory has finally declined, but the number of pigs in the pens has not fallen at the same time. National hog slaughter in the first three quarters reached 53739 ten thousand head, up 1.4% year on year; pork production increased by even more, reaching 3.2%. Inventory is shrinking, slaughter is rising, and hog prices have been seesawing around 10 yuan/kg. These three trends appearing together provide the clearest picture of the hog industry today.
1 Change
Slaughter numbers and inventory move in opposite directions; understanding current supply characteristics
In the first three quarters, the number of pigs slaughtered nationwide continued to rise, while pig stocks fell slightly at the end of the third quarter. These opposing movements in the data outline the current reality of the industry: “market supply continues to be released, while underlying production capacity is gradually adjusted.” The number of pigs slaughtered rose slightly, while pork production increased by considerably more. This difference reflects a rise in the average slaughter weight of pigs on the market and an increase in the amount of pork produced per pig. Even though stocks have begun to decline, production capacity accumulated earlier will continue to be converted into market-ready hogs and enter the market. Supply pressure will not ease immediately.
Across all meat categories, total output of pork, beef, mutton, and poultry continued to grow, with poultry showing the strongest increase. Milk production also rose slightly. Output of beef and mutton, as well as eggs, declined to varying degrees, with mutton recording the sharpest drop. For the year as a whole, the number of pigs slaughtered and pork production are both expected to maintain an overall upward trend, with a chance of exceeding last year’s output levels. After an extended period of weak profitability, farms have been gradually adjusting herd sizes in actual production, contributing to a decline in stocks at the end of the quarter. However, the overall pace of adjustment has been relatively gradual, with no rapid contraction.
2 waiting
The peak season in the fourth quarter provides support, but a market reversal still requires patience.
After entering the fourth quarter, temperatures fall and traditional cured-meat production and consumption gradually get underway. This brings a seasonal boost to pork consumption and provides some support to market prices. However, we should also take an objective view of the effects of peak-season demand. At this stage, overall supply remains relatively high, and a seasonal increase in consumption alone is unlikely to drive a substantial rise in pig prices. A decline in breeding stock indicates that the industry has begun adjusting its production capacity, but a market turnaround cannot happen overnight; there will be a certain time lag.
During this period of bottoming out in the industry, pig farms should give even greater priority to managing their daily cash flow. Based on their actual cash reserves, they should plan the pace of hog sales appropriately, avoid betting too heavily on short-term market movements, and refrain from making impulsive decisions to restock. To gauge the market’s future direction, it is also necessary to keep monitoring changes in the population of breeding sows, average hog slaughter weight, frozen-product inventory levels, and the actual recovery in end-consumer demand. These indicators will continue to influence how supply and demand evolve.
The livestock industry is inherently subject to cyclical fluctuations, and capacity adjustments are also gradual. The decline in livestock inventories has already sent a positive signal, but improving the balance between supply and demand will take time and require steady progress. We need not exaggerate short-term pressures or have overly high expectations for the peak season. Instead, we should take the actual conditions of our own pig farms as our starting point, manage production and operations steadily, and wait for market supply and demand to gradually change.