According to monitoring by the Ministry of Agriculture and Rural Affairs, on 10/23, the average pork price at national agricultural product wholesale markets was 15.82 yuan/kg, up 0.8% from 15.7 yuan/kg last Friday (10/16). The average price for this week was 15.78 yuan/kg, down 0.6% from last week’s average of 15.87 yuan/kg.
Domestic live pig prices fluctuated downward this week, with the weekly average falling week over week. According to China Pig Network, on 10/23, the price of live pigs (three-way crossbred) was 9.66 yuan/kg, down 2.2% from 9.88 yuan/kg last Friday (10/16). Looking at the weekly average, the average live pig price this week was 9.83 yuan/kg, down 1.8% from last week's average of 10.01 yuan/kg.
Recent pork and live pig prices. Chart by The Paper
The national average live hog transaction weight continued to rise this week. Data monitored by SunSirs show that the national average live hog transaction weight was 125.41 kilograms, up 0.23% week on week. Average transaction weights rose in most provinces this week. In some areas, however, hog disease led to an increase in the proportion of smaller hogs, and average weights edged down. Farms were highly willing to ship hogs, but the market saw insufficient growth in demand. In many areas, sluggish sales led to involuntary holding of hogs, and the average weight of hogs shipped nationwide continued to rise. As shipment weights increased, the average weight of hogs arriving at plants also rose, and the average purchase weight of slaughterhouses followed suit. However, fresh-pork sales were loss-making and the cutting margin was insufficient; at the same time, hog disease occurred in some areas. Low-priced, lighter hogs continued to flood the market, and slaughterhouses opted to buy at lower prices to protect profits. As a result, the average purchase weight rose more slowly than the average shipment weight. Demand was generally unremarkable during the week, with downstream buyers showing little interest in purchasing and no notable increase in slaughter volumes. Farms remained highly willing to ship, and hog supplies were ample. However, with limited support from end-market demand, market participants mostly chose to sell at lower prices. The share of low-priced hogs increased, and downstream buyers mostly opted for lower-priced purchases. The actual transaction price level for live hogs moved lower during the week.
Dadi Futures believes that current market performance has undermined the optimistic expectation that the earlier reduction in production capacity would translate into a contraction in the supply of market hogs. The relatively large base of market hog supply remains the core constraint for the rest of this year. The continued increase in slaughter weights currently reflects production capacity shifting to a later period. Supply is increasing while demand is weak, and in the short term there is a lack of effective positive drivers, with pressure continuing to be absorbed. In the medium term, seasonal demand such as for cured meats is still expected. Hog prices may see a temporary adjustment, but the underlying supply volume, high weights, and frozen-product inventories are expected to weigh on hog prices in the fourth quarter.
Zhuochuang Information expects the national market to fluctuate downward over the coming week. The average hog price may decline week on week over the coming week. The first half of the second upcoming week falls at the turn of the month, when supply may briefly tighten, pushing prices up slightly; in the latter part of the week, hog supply is expected to increase gradually, and prices may edge down.