As 10 moves into its second half and the Frost's Descent solar term approaches, recent cold air has caused temperatures in northern China to fall noticeably. However, despite the cooler weather, the seasonal recovery in pork demand remains weak. With average hog weights increasing, the pork supply outlook is ample. In addition, frozen pork inventories remain high, downstream trading is subdued, and traders lack the inclination to stockpile. Most market participants are focusing on reducing volumes to keep prices stable, curbing fresh pork sales. Slaughterhouses are adjusting production according to sales, with operating rates remaining relatively low. So far, the operating rate at sampled slaughterhouses is 30.31%, and demand lacks effective support!
Currently, peak-season consumption is underwhelming, and consumers have little inclination to build up fat for winter. Meanwhile, changes in China’s population structure, the economic backdrop, and labor-intensive industries have led to a year-on-year decline in pork demand. Market substitutes are also available in ample supply, and consumers increasingly favor low-fat diets. Pork demand is cooling, while poultry, eggs, aquatic products, and other substitutes are widely consumed, further weakening pork trading during the peak season!
However, pork trading remains sluggish, and slaughterhouses are adjusting production according to sales, so the market is not absorbing hog supply sufficiently. As for secondary fattening, although quotes for standard-weight hogs have fallen to around 4.8 yuan per jin, expectations of ample future pork supply remain strong among secondary fatteners, and there is little inclination to enter the market on dips to buy at the bottom. Hog supply pressure remains considerable!
According to institutional research, this month, domestic hog slaughter volumes are at a high level. In particular, compared with 9 month, slaughter volumes at major corporate hog producers increased by nearly 2.45% month on month (Zhuochuang data monitoring). During the month, the supply of commercial hogs was ample. In addition, as hog fattening has remained unprofitable for a prolonged period, financial pressure on pig farms has surged. Producers need to recoup funds, further increasing their willingness to market hogs. Amid market panic, hog circulation was ample in both northern and southern regions, and slaughterhouses received hogs smoothly, with procurement posing little difficulty!
Based on this analysis, amid changes in supply and demand, the relatively high hog marketing plans, together with increased marketing weights, further strengthen pork supply. Meanwhile, domestic frozen pork inventories are currently ample, with stocks to be released successively in the fourth quarter, further limiting market confidence in price increases!
According to grassroots monitoring, as slaughterhouses adjust their hog procurement settlement prices, on 10 month 23, the average ex-farm price of domestic lean-type standard pigs of the Duroc, Landrace, and Yorkshire breeds is expected to fall to 9.51 yuan/kg, down 0.1 yuan. Going forward, attention should be paid to changes in the pace of market supply and demand!