As the end of the month approaches, the domestic live hog market is in its “Golden October” month, yet prices are on an “endless” downward trend! Although sentiment lifted pig prices slightly at the beginning of the month, the holiday’s positive effects provided only limited support, while supply pressures remained difficult to ease. With production and sales out of sync, domestic pig prices weakened and adjusted downward again! After the National Day holiday, the market saw a “cliff-like” drop, and the average live hog price once again fell below 5 yuan per jin. In recent days, the market has been “sliding down the slide,” with live hog prices continuing to search for a bottom! However, according to the latest feedback, the decline in pig prices has slowed as the weekend approaches, and the market shows signs of stabilizing after the fall. But a rational assessment suggests that current supply-side pressures remain difficult to ease, while demand has not improved significantly. At month-end, pig prices still face a pattern of being “more likely to fall than rise”!
According to data cited from an industry organization, as of 10 month 25, the average ex-farm price of lean-type live hogs of the three-way crossbreed nationwide was 9.36 yuan per kilogram, down 0.04 yuan from the previous day. The decline in pig prices has slowed, but the year-on-year decrease is about 20.95%. The live hog market has reached a “new low” since the second half of the year, and the gap with the annual low of 8.63 yuan per kilogram has narrowed further. Producers are mired in a situation where the “peak season is not strong,” and losses from hog fattening have deepened further, with losses exceeding 260 yuan per head for producers raising their own piglets and fattening them!
By region, of the 7 northern and southern production areas under national key monitoring, data are available for 28 provinces and cities. The average ex-farm live hog price in some areas, including Jiangxi and Hubei, was close to 9.3 yuan per kilogram. Live hog quotes hovered between 8.5 and 10.8 yuan per kilogram, with mainstream live hog quotes in the north and south at 9 to 9.9 yuan per kilogram!
Currently, by region, market conditions in Northeast, North China, and Northwest China have generally stabilized. Sporadic quotations in Northwest China have edged up slightly, while live hog quotations in Heilongjiang, Jilin, and Liaoning have held steady at 9.15~9.25 yuan/kg. In southern markets, including Southwest, East China, Central China, and South China, markets in Southwest and South China are weak, while East and Central China are mainly consolidating. Quotations in Sichuan and Chongqing have fallen to 8.95~9 yuan/kg, quotations in Guangdong and Guangxi are 8.95~10.8 yuan/kg, and quotations in Jiangsu and Zhejiang have stabilized at 9.8~9.9 yuan/kg. Currently, quotations for standard-weight hogs in many areas across the north and south have fallen below 9 yuan/kg, and the market continues to trend weakly as it seeks a bottom!
Based on an analysis of the fundamentals of live hog supply and demand, the market is currently characterized by a weak stalemate, with no clear catalyst for a rebound in hog prices!
On the demand side, demand has fallen back seasonally after the National Day holiday. Previously, the operating rate of slaughterhouses had fallen to around 30%. Although the operating rate of slaughterhouses has edged up in recent days, with the operating rate of sampled slaughtering enterprises recovering to around 30.5%, the increase in demand remains limited, and pork buying and selling lack significant support!
On the one hand, changes in dietary patterns have reduced pork’s share of consumption. With abundant market substitutes, household demand has been slow to recover, while a cooling in urban tourism consumption and reduced population mobility have weakened pork trading. On the other hand, market sentiment is strongly pessimistic, slaughterhouses have built up large frozen pork inventories, and the average weight of hogs marketed has risen. The market expects pork supply to remain ample, and downstream traders mainly replenish stocks to meet immediate needs. Slaughterhouses are finding it difficult to secure new orders. In addition, as downstream prices for white carcasses fall, the spread between “white” and live hog prices at slaughterhouses has reached a late-stage low, deepening per-head losses and prompting slaughterhouses to press prices down!
On the supply side, hog production capacity is in a phase of continued release. In particular, the breeding-sow herd increased month on month in the previous period, and the production efficiency of breeding sows at group hog enterprises has generally reached 25~30 head. Rising production efficiency is adding to the pressure from a concealed increase in hog supply this month! In addition, hog farms have frequently reported pig diseases during the month. After prolonged losses from marketing hogs, producers are more willing to realize sales, and both independent producers and large-scale hog enterprises have been actively offering hogs for sale at times. Major slaughterhouses are receiving hogs smoothly, and procurement is generally manageable. In some production areas, group hog enterprises have fallen well short of their daily marketing targets, leading to more instances of forced price cuts!
Based on this analysis, changing supply and demand are currently putting downward pressure on hog prices. However, toward the end of 10 month, as the average hog price continues to fall, market resistance to price cuts may gradually strengthen! In many northern and southern regions, leading hog enterprises may try to reduce sales volumes and push prices up. There may be limited room for further hog price declines, and changes in marketing pace at month-end may create an opportunity for prices to stop falling and rebound! Pay close attention to changes in the marketing pace of group hog enterprises and in demand in the period ahead!