Recently, China’s live pig market has continued its familiar downward trend, with pig prices breaking below key levels and shifting lower. After the average price of standard pigs fell below 10 yuan/kg, it continued to decline. The average live pig price has now dropped to 9.4 yuan/kg, with prices plunging 8.3% within the month. Market sentiment remains bearish in particular, and pig prices are still unlikely to see a meaningful rebound in the short term. Prices may continue to bottom out amid a generally weak trend!
From a supply-and-demand perspective, the decline in pig prices is mainly due to lackluster demand: the seasonal peak in demand has failed to materialize, while supply has increased slightly month on month. This month, the live pig market faces pressure from both “ample supply and a sharp drop in demand”!
On the marketing side, based on the earlier sow inventory base, production capacity and efficiency, and the level of completion of sales plans by large-scale pig companies last month, sample 173 pig companies plan to increase sales by 1.91% month on month in 10, slightly boosting supply capacity. In particular, since the start of this month, sharp temperature fluctuations have increased biosecurity risks on pig farms. In addition, farming losses have deepened and pressure from financing costs has surged. Both independent producers and large-scale pig companies are more willing to sell, and supply is coming to market relatively quickly. In both northern and southern regions, slaughterhouses are facing relatively little difficulty sourcing pigs, and production capacity is being released at a high level!
In terms of demand, last month, the operating rate of sampled slaughterhouses across China was generally around 31~34%. However, since the start of this month, the operating rate of sampled slaughterhouses has generally hovered around 30.5%, indicating a sharp month-on-month decline in demand. This was mainly due to demand falling back as expected after the Mid-Autumn Festival and National Day holidays, with the holiday atmosphere fading. Domestic sales and urban demand weakened, while ample supplies of market substitutes led more households to switch to alternatives, hampering shipments of white carcasses. As the weather turned cooler this month, the average weight of hogs shipped increased, further strengthening pork supply. Average hog slaughter weights climbed, worsening the imbalance between production and sales!
Based on this analysis, under pressure from excess supply and demand, domestic hog prices have recently continued to slide. The market lacks effective support. In particular, demand has been sluggish, and the narrowing spread between carcass and live hog prices has deepened per-head losses at slaughterhouses. Major slaughtering enterprises are setting production according to sales, keeping operating rates low. Consumer demand has provided insufficient support for hog prices, while frozen pork has continued to enter the market, further dampening expectations of a rebound in hog prices at the end of the month.
Based on monitoring and analysis at the grassroots level, following price adjustments by slaughterhouses, the national average ex-farm price of three-way crossbred hogs is expected to be 9.36 yuan/kg on 10 month 25 day. The market is expected to continue fluctuating downward. Going forward, attention will focus on changes in the shipment pace of major hog enterprises at the end of the month!
Overview of hog prices across provinces and regions in northern and southern China (for industry exchange and reference only)