1 and 10: Hog prices continued to weaken
In 10, domestic live hog prices generally stabilized briefly before declining continuously, with the decline widening. According to monitoring by Zhuochuang Information, as of now, this month’s average national transaction price for three-way crossbred hogs is 10.00 yuan/kg, down 6.31% month on month and down 13.14% year on year. The brief stabilization earlier was mainly due to concentrated shipments by some large-scale farms during the National Day holiday. Monthly shipments had run ahead of schedule, prompting producers to support prices after the holiday. However, after shipments resumed following the holiday, demand support weakened. Oversupply caused hog prices to stop stabilizing and begin falling, with the rate of decline continuing to accelerate. Some leading companies supported prices, but this was still insufficient to prop up the market.
Figure 1 National live hog supply and demand comparison trend chart
Data source: Zhuochuang Information
2, weight continues to increase, and accelerated hog marketing still cannot conceal the difficulty of digestion
This week, the national average transaction weight of live hogs increased. Zhuochuang Information monitored the national average transaction weight of live hogs at 125.12 kilograms, up 0.29% week on week. Average transaction weights rose in most provinces. Only Jiangxi saw a slight decline because pig diseases continued to prompt the marketing of small pigs, while some enterprises in Guangxi reduced weights at marketing due to losses. Pig diseases occurred in many areas in both the north and south. Some leading farms, anticipating a relatively large future supply gap for large pigs, took active steps to hold pigs back after the holiday. At the same time, severe oversupply in the post-holiday market and strict checks on quarantine certificates also led to involuntary holding in many areas, pushing up average marketing weights overall. Slaughterhouses mostly purchased as needed. Both cutting and fresh sales were generally loss-making, and enterprises had no current intention to increase cutting volumes or put product into storage. Overall procurement weights remained balanced, with little change in average purchasing weight.
The average marketing weights monitored for TOP5 breeding enterprises, medium-sized breeding enterprises, and small and scattered breeders were 125.78 kilograms, 126.25 kilograms, and 126.42 kilograms, respectively, changing week on week by an increase of 0.87 kilograms, a decrease of 0.03 kilograms, and an increase of 0.17 kilograms, respectively. An analysis of average marketing weights by breeding enterprise size shows that TOP5 breeding enterprises anticipated a shortfall in large pigs and held some pigs back. The weak market also slowed their marketing pace, resulting in a notable increase in average marketing weight. Medium-sized breeding enterprises had relatively heavy pigs and were considerably behind their monthly marketing schedule, so many actively marketed pigs, and their average weight edged down. Some small and scattered breeders continued to hold pigs back involuntarily because of quarantine certificate issues or losses, and their average weight increased slightly.
Figure 2 Trend chart of the national average live pig weight, average slaughter weight, and weight difference
Data source: SunSirs
3, Frequent pig disease outbreaks have led to a concentrated release of piglets for sale, widening the price spread between fattening pigs and standard pigs
This week, the national average price spread between heavy and standard pigs was 0.86 yuan/kg, an increase of 0.02 yuan/kg from the end of last month, with a month-on-month increase of 0.73%. This month, the national price spread between heavy and standard pigs first rose and then fell, with the average declining month on month. Producers still have the intention to hold pigs back in anticipation of higher prices, but monthly marketing pressure is relatively high, and pig weight gain is accelerating. Oversupply has made it difficult to absorb the supply of live pigs, leading to involuntary holding. Compared with before the holiday, the slight widening of the spread between heavy and standard pigs after the holiday was mainly due to low-weight pigs being sold at low prices in some areas because of pig disease, rather than stronger prices for heavy pigs caused by a widening shortage of large pigs. In some areas, pigs from secondary fattening operations have still not been marketed in time, and pressure from large pig inventories remains relatively high. In the short term, large pigs have no momentum for a rebound and are even less likely to provide strong support for rising pig prices.
In summary, producers are holding pigs back both voluntarily and involuntarily. Supply is broadly unchanged from before the holiday, but slaughter volumes have fallen far more than before the holiday. Insufficient absorption of pig supply has widened the negative difference in weight. Although the spread between heavy and standard pigs has widened, this is mainly because pig disease has pushed down prices for standard pigs. The shortage of large pigs is not evident, and therefore they are unlikely to provide much support for pig prices in the short term.