As 10 draws to a close, the domestic live hog market saw a slight recovery in prices at the beginning of the month, supported by the holiday atmosphere, with prices for standard pigs rising to 10.25 yuan/kg. However, this brief year-end rally in pork prices quickly faded. As the holiday atmosphere subsided, marginal support from demand weakened, while various types of producers actively brought hogs to market on the supply side. Prices came under pressure and fell, and the market saw a “retaliatory” decline. As of now, 10 is about to end, but pork prices have been unable to stop falling, with the average price of standard pigs repeatedly hitting new lows for the second half of the year. So, will pork prices set a new low for this year? Here is the analysis:
According to data from an industry organization, as of 10 24, the national average price for slaughter-ready lean-type, three-way crossbred live hogs was 9.4 yuan/kg, equivalent to 4.7 yuan/jin. This was down 0.1 yuan/kg from yesterday and down 20.61% year over year. Pork prices have retreated, and the market is showing a “second bottoming-out” pattern. The average live hog price has now fallen back to its level before the Dragon Boat Festival. It is only 0.77 yuan/kg above the annual low of 8.63 yuan/kg, and prices are falling more sharply than expected.
According to cited data monitoring, among the 28 key regions monitored across northern and southern China and the 7 pig-producing regions, hog prices are continuing to fall in most areas. Only scattered quotes in East China have edged up slightly! The national average price for market hogs is in line with that in Jiangxi, with national quotes at 8.5~10.9 yuan/kg! In lower-priced regions, prices in Xinjiang have bottomed out at 8.5 yuan/kg, while quotes in Guizhou have fallen to 8.95 yuan/kg; the average hog price has fallen below 9 yuan/kg. In higher-priced regions, quotes in Guangdong have fallen to 10.9 yuan/kg, and quotes in Fujian have fallen to 10.7 yuan/kg! Across northern and southern China, hog quotes in major regions have fallen to 9.05~9.9 yuan/kg, with prices generally dropping into the “4-yuan era”!
At present, the decline in hog prices “shows no sign of stopping”; the market center of gravity is gradually shifting downward. Prices in 10 are maintaining a downward trend, down 8.29% compared with the beginning of the month. In my view, the reasons behind the decline in hog prices are as follows:
First, supply is increasing while consumption is weak! As 10 moves into its latter part, domestic hog supply this month has “increased rather than decreased” month on month. On the one hand, sow inventories 10 months ago increased by 4 ten thousand head month on month, supporting an increase in this month’s supply of market hogs. On the other hand, last month, demand ahead of the Mid-Autumn Festival and National Day provided insufficient marginal support. Slaughterhouses reported that pre-holiday stockpiling fell short of expectations, and major group hog producers performed poorly in fulfilling their shipping plans, with planned shipments completed at 99.01%; some production capacity was delayed in coming to market!
As a result, hog supply this month has “increased rather than decreased.” In addition, sow inventories were high in the earlier period and production capacity was being utilized efficiently, further intensifying the pressure from oversupply this month! Moreover, domestic hogs have recently been gaining weight faster during fattening. As of this week, market hog weight has increased to 125.12 kg (Zhuochuang data), up 0.29% month on month, further increasing the market supply of pork!
However, on the demand side, demand absorption has remained sluggish recently. On the one hand, pork consumption has yet to pick up, seasonal demand has provided limited support, and slaughterhouse operating rates have remained low, with the market absorbing hog supplies very slowly. On the other hand, as pork supplies continue to increase and frozen pork is gradually shipped out, the market expects ample pork supply in the fourth quarter. This has dampened the willingness of secondary-fattening operators to enter the market and replenish stocks with standard-weight hogs, further intensifying oversupply pressure!
Second, with the arrival of the Frost's Descent solar term, temperatures are gradually cooling across northern and southern regions, and cold-air activity will become more frequent. The risk of stress among finishing hogs is increasing. In some areas, sharp temperature fluctuations have led to more disease outbreaks at pig farms, further heightening anxiety among producers and accelerating changes in the pace of hog marketings!
Third, the structure of hog inventories is changing, with inventories of medium- and large-sized hogs rising in China. There is no significant price spread between standard-weight and fattening hogs, limiting confidence in holding hogs back and also discouraging secondary-fattening operators from entering the market!
Based on this analysis, amid changes in supply and demand, hog prices are continuing their weak trend, and the market may remain volatile and decline in the short term! Going forward, attention should be paid to the marketings of large-scale hog producers and changes in slaughterhouse operating rates. If large-scale hog producers restrict sales and push prices higher at the end of the month, the market may still have a chance to stabilize and recover! However, hog prices are unlikely to set a new low, and are unlikely to fall below the previous low of 8.63 yuan per kilogram!