As 10 moves into its latter part, the domestic live hog market is currently seeing pork supply remain high, frozen pork inventories stay elevated, hog weights at slaughter rise, and the supply of market hogs continue to increase. Supply growth has exceeded expectations, while demand feedback has been average. Although seasonal demand is gradually improving, the boost to consumption remains limited. For now, the mismatch between production and sales is difficult to improve, leaving pig prices stuck in a rut and the market trending weakly at low levels!
Currently, domestic prices for standard pigs have fallen to 9.81 yuan/kg, and pig prices have weakened again. Bullish and bearish factors coexist in the live hog market, but the pressure from the current imbalance between production and sales is too great!
Positive factors: On the one hand, temperatures are gradually falling, with a sharp drop in temperatures in northern China. The outlook for marginal improvement in pork consumption is gradually improving, and downstream pork purchasing and sales demand is slowly recovering. Currently, the operating rate of sampled slaughterhouses has risen to 30.4%, indicating a slight improvement in demand! On the other hand, live hog prices have continued to run at relatively low levels. There are expectations that producers may “try to push prices higher” and that secondary fattening operators may enter the market when prices are low. In addition, the peak period for southern China’s cured meat production near the end of the fourth quarter is approaching, and market sentiment may gradually improve!
Bearish factors: On the one hand, hog supplies are ample. This month, planned hog marketings increased month on month, and the weight of hogs marketed rose, strengthening the amount of pork supplied per hog and further intensifying the oversupply situation. In particular, the risk of disease at pig farms was higher this month. Amid periodic losses in the farming sector, pessimism was strong, and some market participants sought to cash out and exit, putting excessive pressure on supply. On the other hand, the recovery in pork demand was weak, and seasonal demand provided limited marginal support. In particular, poultry meat supplies were ample, and consumer substitution increased. In addition, domestic frozen pork inventories were high, and frozen pork may be released onto the market in succession in the fourth quarter. This further restrained a strengthening hog market and prolonged the “bottoming-out” cycle in hog prices!
Against this backdrop, with weak supply-and-demand fundamentals, the hog market has remained sluggish, and hog prices have continued to trend lower! As of now, citing grassroots monitoring, the average price for hogs marketed across the north and south’s 7 key monitored production areas nationwide was 9.73 yuan/kg, down 0.08 yuan. The market continued to show a broadly weak trend. In the latter part of 10 month, hog prices may remain in a pattern of “more likely to fall than rise,” and farmers’ hopes for a month-end “tail-end rally” may not be realized!