As 10 draws to a close, domestic live hog prices have recently fallen more than expected amid a supply-demand imbalance, and the market continues to search for a bottom. After quotes for standard-weight three-way crossbred hogs fell below 10 yuan/kg, prices continued to retreat, with quotes for standard-weight hogs dropping to 9.73 yuan/kg. The market is seeing a “hyper-rational” decline. In particular, during the traditional “Golden September and Silver October” months, hog prices have failed to show their usual peak-season strength. Farming losses have widened sharply, with average losses per self-bred and self-raised hog reaching nearly 250 yuan at one point. The market lacks an impetus for prices to rise, and the outlook for hog prices in the fourth quarter has become even more uncertain…
Recently, the authorities released data on the sow herd. At the end of the third quarter this year, the sow herd stood at 3602 ten thousand head. Capacity reduction exceeded expectations, with the herd down nearly 10.7% year on year. In addition, the number of breeding sows fell below the key threshold of 3750 ten thousand head, a reduction of 178 ten thousand head from 3780 ten thousand head at the end of the second quarter. Since sow inventories affect market hog supply after 10 months, confidence in the outlook for hog prices after the second quarter of next year is gradually recovering. However, that does not solve the immediate problem: the live hog market still faces a severe supply-demand imbalance!
On the one hand, the momentum of hog shipments has yet to fade. This month, planned shipments by large-scale pig farming companies are up 1.91% month on month. As the weather cools, the risk of stress during hog fattening increases. In addition, the accelerated culling of sows and increased weight gain during hog fattening have pushed up shipment weights, keeping supply capacity in surplus!
On the other hand, marginal consumer demand has cooled! After the Mid-Autumn Festival and National Day, the festive atmosphere faded, and pork supply and demand returned to a quiet state. Although temperatures have fallen, marginal demand recovery has been weak. At present, the operating rate of sampled slaughterhouses is 30.32%, and demand is at a seasonally low level!
Therefore, in month 10, hog supply and demand showed a pattern of “one side waning as the other waxed.” Demand briefly came under pressure and retreated, while supply continued to increase month over month. Hog prices faced pressure from both directions, and the price center continued to retreat. The average price for standard-weight pigs fell to 9.73 yuan/kg, and the market still faced a trend of further searching for a bottom!
According to institutional monitoring, in response to slaughterhouse price adjustments, the national average ex-farm price for lean-type standard pigs of the Duroc-Landrace-Yorkshire crossbreed is expected to be 9.61 yuan/kg on day 22 of month 10. Going forward, attention should be paid to changes in the pace of market supply and demand, especially changes in the pace of shipments by major hog-farming companies at the end of the month!