After pig prices fell below 5 and entered 4, the live pig market was already in dire straits.
Now piglet prices have also plunged. In 7, a weaned piglet weighing 7 kilograms could still sell for 258 yuan. By early 10, the average price had already fallen to 105 yuan.
In some cases, the drop has been even more dramatic, with prices falling below 100 yuan.
Monitoring in 500 counties by the Ministry of Agriculture and Rural Affairs also showed that piglet prices fell by about 3 tenths year on year.
In other words, this isn’t an isolated phenomenon; piglet prices are falling across a wide area.
What does that mean?
The industry has done the math: the total cost of raising one weaned piglet is between 260 and 280 yuan. In other words, pig farms now lose one hundred and fifty to one hundred and sixty yuan on every piglet they sell.
In theory, with prices having fallen this much, people should be snapping them up, right? But the reality is exactly the opposite: the cheaper they get, the fewer people buy them.
I think this is worth analyzing. Why?
Everyone pays attention to production capacity, the inventory of breeding sows, hog marketings, and average market weight at slaughter. There is nothing wrong with that, but piglets are also one of the most sensitive barometers of the hog cycle.
It takes nearly 10 months from breeding a sow to bringing a finished hog to market. So piglet prices do not reflect today's hog prices, but rather the market's expectations for hog prices six months from now.
Expensive piglets indicate that the entire industry is scrambling to restock and that people generally have a positive outlook on next year's market. When piglets are so cheap that no one wants them, it means people have voted with their hard-earned money: they are not optimistic about the market ahead.
So piglets are the most sensitive leading indicator in the entire industry chain, turning earlier than the price of market hogs. And with piglets collapsing like this now, it is as if the entire industry is collectively saying one thing: it has no confidence in the market this coming spring.
This lack of confidence isn't just a guess.
First, production capacity is declining while the number of animals shipped for slaughter is increasing.
The number of sows in the herd is indeed falling. At the end of the second quarter, there were 3780 ten thousand productive sows, down by more than two million year on year. But sows have become more productive: in recent years, the industry average PSY has risen from fewer than 20 to more than 23, while large-scale producers generally achieve 28 to 30. A large part of the shortfall from having fewer sows has been made up by higher output per sow.
Moreover, it takes nearly 10 months for the decline in sow numbers to feed through to hog marketings. Piglets born when herd numbers were high earlier are now flooding the market all at once.
Now look at the number of hogs shipped to slaughter—good grief, even more alarming. The latest forecast is that hog slaughter will reach 2026 hundred million head in 7.39, a record high since 2020.
In this situation, who would dare restock their livestock?
Second, reducing the number of sows does not mean reducing meat production.
Then there is weight, which is even harder to assess: slaughter weights have remained consistently high.
Consumers buy pork, not pigs. A heavier pig means more meat, which indirectly amounts to more pigs.
With supply pressure staring us in the face, how should this column be filled in?
Third, they got burned trying to buy the dip.
This is not the first time piglets have crashed. In the fourth quarter of last year, piglets fell to 165 yuan; around the middle of this year, they fell to 150 yuan.
In both of these “bottoming out” episodes, people entered the market, but most of them basically didn’t make any money.
As the saying goes, once bitten by a snake, one fears a coiled rope for ten years. Raising pigs is no longer an industry where simply catching the right cycle can make you rich overnight.
So this also signals that market expectations for hog prices have weakened considerably. The chill in the piglet market will ultimately feed back to the market for larger pigs.
After the National Day holiday, hog prices kept edging down and then returned to the "4-yuan era." Although there have been signs of a slight rebound over the past two days, everyone knows that it is only a technical bounce caused by large producers cutting back on sales volume, not a reversal.
This year's hog slaughter may reach a record high. The group's slaughter plan for 10 is still increasing month on month, the large hogs held back earlier are also poised to come to market, and frozen-product inventory capacity is above 3 percent...
On the demand side, an exceptionally strong El Niño is bringing a warm winter, so the curing season may well be pushed back. The much-anticipated “fire” of the year may arrive late, or may not burn brightly at all.
So from here, hog prices are likely to do little more than rebound from low levels; getting back to the cost line will be difficult.
Of course, piglets falling to rock-bottom levels also carries another implication: no one dares to restock, which means supply in the second half of next year may quietly contract.
On 10 month 19, the National Bureau of Statistics is about to release third-quarter data. The official answers on just how much the breeding sow herd has been culled and whether the live pig inventory has fallen will soon be revealed.
This figure directly affects future pig prices. Guanguan will break it down for everyone as soon as possible.