Hog prices fell below 5 and entered 4, and the hog-to-grain ratio dropped below 5:1. Futures also broke below 5 and entered 4, falling from the 5 digits to the 4 digits……

 

I thought prices had already broken through a key support level, but unexpectedly, they still haven't bottomed out. Hog prices continue to plunge.

 

Live hog futures fell below the ten-thousand-yuan mark. I thought prices would at least pause and catch their breath, but unexpectedly, they fell even more sharply today.

 

The main contract fell another 1.16%, down to 9825.

 

The recent months were even worse, falling to 9105 from 2611, a decline of 2.15%.

 

There’s no good news on the spot inventory side either.

 

The national average price of live pigs fell to 4.72 yuan per jin, declining for 4 consecutive days and hitting a new low in nearly 118 days, or roughly 4 months.

 

 

In 31 provinces, 26 provinces are declining, with only Gansu edging up slightly.

 

This is completely insane.

 

To be honest, this drop exceeded many people's expectations.

 

I thought it had hit bottom—why is it still plunging?

 

Even though the number of breeding sows has already fallen below the red line, and futures have already hit a new low since listing, why are prices still falling?

 

The answer is actually just one sentence: market sentiment is exceptionally poor.

 

Although live hogs are falling across the board, it is clear that nearby contracts have dropped the most, while deferred contracts have held up reasonably well.

 

What does this mean?

 

This shows that the market is unwilling to offer even the slightest hope for the market conditions in these few months before the Spring Festival.

 

In the near months, actual delivery is required and contracts must correspond to spot goods. The steeper the decline, the more pessimistic the market is about the period immediately ahead.

 

Looking again at spot goods, we are currently in one of the most difficult positions:

 

On the demand side, after the two festivals, downstream purchasing has returned to normal, with poultry, eggs, beef and mutton continuing to divert demand.

 

Southern cured meats and sausage-making have not yet gotten underway; at the earliest, volumes will not pick up until the middle to latter part of 11, so these 40 or so days are currently the lull when consumer demand is at its weakest.

 

Supply-side pressure is greater. In the latter part of the month, large-scale farms are pushing to ship more pigs and lowering prices to move volume. The pigs being shipped are all weighing over 124 kilograms, and pigs grow faster as temperatures drop.

 

Frozen-product inventories, more than ten percentage points higher year over year, are still weighing on the market. As soon as spot prices rise, frozen meat comes out to capture arbitrage profits, keeping a firm ceiling on fresh meat prices.

 

On one side, demand is weak; on the other, supply keeps flowing out, with a lot of bearish sentiment in between. Naturally, hog prices cannot rise.

 

It’s not just that there are many pigs; there’s also a lot of meat. It’s not that no one wants it—everyone is just afraid to take it on.

 

This is the most accurate reflection of the situation right now.

 

However, looking at it from another angle, as we said yesterday, the worse things are now, the more favorable it is for next year.

 

Only when the situation at hand is bad enough can capacity be cut deeply enough.

 

In the current situation, who would dare to expand production? Who would dare to hold back sales and bet on prices rising? Who would dare to restock on a large scale?

 

No one dares anymore, so the turning point in pig prices really is on its way.

 

Will the market still be good in the fourth quarter?

 

To be honest, there has been no real improvement in the short term. Supply is strong, demand is weak, and the market is extremely pessimistic. Under these circumstances, hog prices will remain under pressure, and the market will continue to search for a bottom.

 

But looking ahead, I don't think there's any need to despair.

 

Because there may be some improvement in the middle to latter part of the fourth quarter.

 

First, bearish sentiment is always absorbed.

 

Having fallen to this level, those who were going to panic have mostly done so, and those pigs that were going to be sold have mostly been sold.

 

As the saying goes, once all the bad news is out, things can only get better. Although you could hardly call it good news, as long as sentiment stabilizes, prices will have room to catch their breath.

 

Second, cured meat consumption may pick up.

 

Sausage-making and curing are genuine seasonal demand drivers, with demand picking up in mid-to-late 11 each month, providing real support for hog prices.

 

However, as mentioned earlier, the influence of this El Niño may bring a warmer-than-usual winter this year. If that happens, the production of cured and preserved meats may also be affected, so its impact in boosting pork prices will be limited.

 

And there’s still frozen inventory weighing on the market, so a sharp rally or an overnight turnaround is out of the question.

 

So these are currently the toughest days for the pig market.

 

There’s no other way; we can only tough it out.