As the market entered the latter part of 10 month, hog prices in China strengthened slightly last weekend, with quotations briefly rising to 9.86 yuan/kg. Unfortunately, producers’ efforts to hold back hogs and maintain prices proved difficult to sustain. Supply pressure remained undiminished during the month, while demand-side support was limited, and market feedback on white carcass trading was quiet! Under pressure from multiple factors, the live hog market suddenly cooled, and prices weakened again. In theory, because the supply-demand pattern is unlikely to change, hog prices in 10 may “fall into the red” through month-end, leaving the market facing a “bottoming-out” situation!
According to data monitoring, as of the 10 month 20 day,three-way crossbreedthe average ex-farm price of lean-type live hogs had fallen to 9.81 yuan/kg, down 0.05 yuan. The live hog market remained weak, falling 12.72% year on year. The market continued to show a pattern of “easier to fall than to rise,” and hog fattening remained in a period of cyclical losses! In particular, during the traditional “golden September and silver October” months, the peak season for China’s live hog market failed to materialize, and the market trend of “prices falling around holidays” became pronounced. Prices for standard-sized hogs were at a temporary low, and hog prices entered the “4-yuan era”!
Based on grassroots market feedback, hog quotations across the key monitored 28 regions in northern and southern China are currently stable to slightly weaker. Prices were mostly weak in East, Central, North, and Northwest China, while markets in Southwest and South China were mainly steady. The market has shifted “from rising to falling.” The average ex-farm price of live hogs was close to 9.8 yuan/kg in Heilongjiang. Quotations in most parts of China hovered between 8.95 and 11.2 yuan/kg, while quotations in major regions hovered between 9.4 and 10.2 yuan/kg, with no significant price differences in the market! In particular, in Southwest China, quotations in Sichuan and Chongqing were 9.4–9.45 yuan/kg, while quotations in Heilongjiang, Jilin, and Liaoning were 9.45–9.8 yuan/kg, indicating an inverted regional hog price relationship!
Reports indicate that hog prices have weakened again, and the rise in quotations was “a flash in the pan.” The seasonal rebound in hog prices lacked solid support. The logic behind the price decline is as follows:
On the one hand, supply pressure is excessive! At present, the domestic live pig market has an oversupply of market-weight pigs and pork for end consumers!
Regarding live pig shipments, as the weather turned cooler during the month, pigs gained weight more quickly during fattening, increasing the market supply of standard-weight pigs. The proportion of medium and large pigs in inventory also rose, and the average shipment weight of live pigs climbed to 124.33 kilograms. The standard-to-heavy pig price spread showed signs of narrowing, dampening producers’ willingness to hold pigs back from shipment. In addition, this month, the average monthly increase in shipments by large-scale pig farming companies was 1.91%, keeping live pig supply ample. With market sentiment pessimistic, however, financing pressure on large-scale pig farming companies rose sharply. Producers had a need to realize cash from time to time, and shipment pressure remained high!
Regarding pork supply, the increase in live pig shipment weights boosted pork supply. Last week, the average slaughter weight per head at slaughterhouses increased by 0.22 kilograms. In addition, frozen pork inventories were high, and frozen pork shipments gradually picked up in the fourth quarter, further intensifying market supply pressure!
On the other hand, demand has struggled to recover! At present, marginal support from consumer demand is insufficient. As for pork, although the weather has turned cooler and temperatures have fallen further, expectations that households will eat more to prepare for autumn have recovered, and slaughterhouse operating rates have edged up slowly, the operating rate among sampled slaughterhouses is around 30.4% to date. The marginal recovery in demand remains weak. In particular, increased consumption of substitutes has limited growth in pork demand;
As for live pigs, the outlook for pork supply is ample, and the price spread between heavy and standard-weight pigs has narrowed. Market sentiment toward buying standard-weight pigs at a low price for secondary fattening is currently weak. In particular, sustained losses among producers have further dampened interest in secondary fattening!
Based on this analysis, with supply ample and the marginal recovery in demand weak, the current imbalance of strong supply and weak demand in the live pig market is evident. The center of gravity of pig prices may fluctuate downward. In theory, pig prices at the end of 10 month may remain weak as they bottom out, with little prospect of a substantive rebound. Particular attention should be paid to changes in market shipment pace!
According to data monitoring, as of the 10 month 20 day,three-way crossbreedthe average ex-farm price of lean-type live hogs had fallen to 9.81 yuan/kg, down 0.05 yuan. The live hog market remained weak, falling 12.72% year on year. The market continued to show a pattern of “easier to fall than to rise,” and hog fattening remained in a period of cyclical losses! In particular, during the traditional “golden September and silver October” months, the peak season for China’s live hog market failed to materialize, and the market trend of “prices falling around holidays” became pronounced. Prices for standard-sized hogs were at a temporary low, and hog prices entered the “4-yuan era”!
Based on grassroots market feedback, hog quotations across the key monitored 28 regions in northern and southern China are currently stable to slightly weaker. Prices were mostly weak in East, Central, North, and Northwest China, while markets in Southwest and South China were mainly steady. The market has shifted “from rising to falling.” The average ex-farm price of live hogs was close to 9.8 yuan/kg in Heilongjiang. Quotations in most parts of China hovered between 8.95 and 11.2 yuan/kg, while quotations in major regions hovered between 9.4 and 10.2 yuan/kg, with no significant price differences in the market! In particular, in Southwest China, quotations in Sichuan and Chongqing were 9.4–9.45 yuan/kg, while quotations in Heilongjiang, Jilin, and Liaoning were 9.45–9.8 yuan/kg, indicating an inverted regional hog price relationship!
Reports indicate that hog prices have weakened again, and the rise in quotations was “a flash in the pan.” The seasonal rebound in hog prices lacked solid support. The logic behind the price decline is as follows:
On the one hand, supply pressure is excessive! At present, the domestic live pig market has an oversupply of market-weight pigs and pork for end consumers!
Regarding live pig shipments, as the weather turned cooler during the month, pigs gained weight more quickly during fattening, increasing the market supply of standard-weight pigs. The proportion of medium and large pigs in inventory also rose, and the average shipment weight of live pigs climbed to 124.33 kilograms. The standard-to-heavy pig price spread showed signs of narrowing, dampening producers’ willingness to hold pigs back from shipment. In addition, this month, the average monthly increase in shipments by large-scale pig farming companies was 1.91%, keeping live pig supply ample. With market sentiment pessimistic, however, financing pressure on large-scale pig farming companies rose sharply. Producers had a need to realize cash from time to time, and shipment pressure remained high!
Regarding pork supply, the increase in live pig shipment weights boosted pork supply. Last week, the average slaughter weight per head at slaughterhouses increased by 0.22 kilograms. In addition, frozen pork inventories were high, and frozen pork shipments gradually picked up in the fourth quarter, further intensifying market supply pressure!
On the other hand, demand has struggled to recover! At present, marginal support from consumer demand is insufficient. As for pork, although the weather has turned cooler and temperatures have fallen further, expectations that households will eat more to prepare for autumn have recovered, and slaughterhouse operating rates have edged up slowly, the operating rate among sampled slaughterhouses is around 30.4% to date. The marginal recovery in demand remains weak. In particular, increased consumption of substitutes has limited growth in pork demand;
As for live pigs, the outlook for pork supply is ample, and the price spread between heavy and standard-weight pigs has narrowed. Market sentiment toward buying standard-weight pigs at a low price for secondary fattening is currently weak. In particular, sustained losses among producers have further dampened interest in secondary fattening!
Based on this analysis, with supply ample and the marginal recovery in demand weak, the current imbalance of strong supply and weak demand in the live pig market is evident. The center of gravity of pig prices may fluctuate downward. In theory, pig prices at the end of 10 month may remain weak as they bottom out, with little prospect of a substantive rebound. Particular attention should be paid to changes in market shipment pace!