The hog market has been buzzing these past couple of days.

 

That’s because the much-anticipated third-quarter data from the National Bureau of Statistics has finally been released.

 

A lot of people have been waiting to see these figures. Why?

 

With hog prices having fallen this far, everyone wants to know what the hog market is like right now and when it will finally emerge from the slump.

 

First, the conclusion: the data have made a striking entrance, effectively revealing the hog market’s hand.

 

First, let’s look at 3 key data points: inventory, marketings, and pork production.

 

 

Let’s take them one at a time.

 

First, hog inventory. The data show that, as of the end of the third quarter, the national hog inventory was 42533 ten thousand head, down 2.6% year on year.

 

What does that mean?

 

There really are fewer pigs. This is the official figure, showing a real reduction in inventory. After eight or nine months of losses, it’s really hard to hold on.

 

Meanwhile, in the first three quarters, 53739 ten thousand hogs were sent to slaughter, up 1.4% year on year.

 

That’s puzzling: the number of pigs on hand is falling, while the number sent to market is rising.

 

Why?

 

Because everyone is rushing to sell ahead of the others—knowing that there will be more pigs and lower prices later, no one wants to hold on to their pigs. Large and heavyweight pigs are being sold off in a concentrated wave, faster than herds are being culled.

 

This also explains why, even though it’s peak season, pig prices are falling instead of rising.

 

As for pork production in the first three quarters, unsurprisingly, it increased year on year by 3.2%.

 

This further confirms what we said before: the number of sows has fallen, but each sow is more productive, and the industry’s average PSY has increased significantly.

 

Combined with keeping pigs on farms longer to increase their weight, the total meat volume has risen.

 

But there is an even more important trump card that has yet to be revealed: the inventory of breeding sows.

 

At the end of the second quarter, the stock of breeding sows stood at 3780 ten thousand head, only 30 ten thousand head above the regulatory target of 3750 ten thousand head.

 

According to estimates by institutions, by the end of the third quarter the stock of breeding sows may already have fallen to around 3700 ten thousand head. In other words, the regulatory target may well have been reached.

 

However, this figure was not published this time, but that does not actually affect the assessment of the hog market.

 

Because whether we look at the reality or at other data, the situation in the live hog market is already clear.

 

First, supply pressure is indeed high.

 

Although the number of pigs in stock has declined, the decrease has not been large, while the overall volume of pork has increased, and the number of pigs being shipped to market is also rising.

 

For example, in 10 the month-on-month shipment plan for pig farms operated by large groups is still increasing. At year-end, they need to boost volumes and collect payments, so the supply peak is concentrated in this winter.

 

Now consider heavier pigs: the national average shipment weight has risen to 129.34 kilograms, 1 kilograms heavier than the same period last year. The average weight among small-scale farmers is close to 148 kilograms, and the large pigs held back earlier are still in the pens.

 

The further into the season, the colder the weather gets and the more weight the pigs put on. Until these heavier pigs are fully cleared, prices can't rise.

 

On top of that, frozen-product storage capacity utilization is still above 3 percent, and everyone is poised to make a move.

 

Second, there are no bright spots in demand.

 

As you can imagine, those few points are all the same old story, with nothing new to offer. And this year, a particularly strong El Niño has arrived, which is very likely to bring a warm winter. Southern China’s curing season may start late and be scaled back, so what bright spots are there?

 

So this data once again confirms the earlier assessment: hog prices will continue to bottom out in the short term. After mid-to-late 11 month, the start of sausage-making and meat curing will bring a seasonal rebound, but prices will most likely remain below the average cost line.

 

In other words, the fourth quarter may offer some breathing room, but it will not turn things around; the hog market will have to keep slogging on.