As 10 draws to a close, China’s domestic hog market has recently seen pig prices “fall without stopping.” Against a backdrop of supply-demand imbalances and a mismatch between production and sales, pig prices have been under pressure and generally weak. However, over the past two days, as hog prices have continued to seek a bottom, market trends have shown some divergence, with prices surging in many areas. Can prices now “reverse,” with a late-month “tail-end rally” imminent? Here is a detailed analysis:
According to data monitoring, following price adjustments by slaughterhouses, the projected average ex-farm price on 10 26 for lean, three-way crossbred hogs nationwide is 9.33 yuan/kg, down 0.03 yuan from yesterday. Pig prices are weak as they “search for a bottom,” down nearly 21% year over year. The market has been “sluggish” this month. In particular, compared with 10.25 yuan/kg at the beginning of the month, pig prices have fallen a cumulative 8.98% this month. The hog market has entered the “4-yuan era,” with prices reaching their lowest level since the second half of the year!
By region, on 10 month 26, slaughterhouse quotations across the 28 key monitored regions in the northern and southern markets showed a tug-of-war between rises and falls! The national average live hog price was close to the quotations in Jiangxi and Heilongjiang, at 9.3 yuan/kg. Across the northern and southern regions, live hog quotations hovered at 8.55~10.8 yuan/kg! Guangdong and Fujian had the highest quotations, with standard-weight hogs at 10.8 yuan and 10.6 yuan/kg, while Xinjiang and Hainan had the lowest, with live hog prices at 8.55 yuan and 8.6 yuan/kg. Across the country’s northern and southern regions, mainstream live hog quotations were around 8.8~9.9 yuan/kg, and the hog price center remained in a “bottoming out” pattern!
In particular, looking at traditional production and sales markets, in the northern regions—the Northeast, North China, and Northwest—live hog quotations were generally 9.1~9.55 yuan/kg, with limited regional price differences; quotations in Heilongjiang, Jilin, and Liaoning were 9.1~9.3 yuan/kg. In the Southwest, East China, Central China, and South China, mainstream live hog quotations were 9~9.9 yuan/kg; quotations in Sichuan and Chongqing were 8.95~9 yuan, those in Shandong and Anhui were 9.6 yuan, and those in Jiangsu and Zhejiang were 9.65~9.9 yuan. Quotations in Henan were 9.55 yuan, in Hunan 9.2 yuan, and in Guangdong 10.8 yuan/kg!
Accordingly, on 10 month 26, the live hog market was mainly volatile with a weak bias. In the northern and southern markets, hog prices moved in both directions: prices were firm in many parts of the Northeast and North China, while quotations were weaker in many parts of the Southwest, Northwest, and East China. The live hog market remained in a standoff!
At present, support at the bottom of hog prices has strengthened slightly. On the one hand, the average live hog price has continued to fall, deepening breeding losses. At present, mainstream large-scale pig farms are losing around 260 yuan per head on self-breeding and self-raising, and producers may become more resistant to price cuts. Also, with the end of the month approaching, some leading pig farms may gradually complete their sales plans, and some may try to reduce sales volume and push prices up. On the other hand, consumer demand is recovering slowly at the margin. Temperatures across the northern and southern regions are gradually cooling, and colder weather in the north may gradually improve follow-through in household demand. Moreover, the peak season for traditional winter meat curing in the south is approaching. The market still has some confidence in a stronger outlook, and there are still isolated instances of secondary fattening operations entering some production areas in the north and south, providing some support for hog prices!
However, in terms of supply and demand fundamentals, this month the hog market is under pressure from a mismatch between production and sales. On the one hand, supply is at a high level. This month, leading and larger pig producers have increased their planned hog marketings. Monitoring data from Mysteel show a month-on-month increase of 1.91% in marketings. In addition, average hog marketing weight has increased during the month, disease outbreaks have been frequent at pig farms, and producers have a strong willingness to market hogs, leaving ample supply capacity. On the other hand, seasonal peak demand is currently underwhelming. The downstream market has seen only a limited increase in the trading of white pork carcasses. Moreover, with frozen pork inventories high and frozen products being released to the market one after another, slaughterhouses have limited capacity to take in hogs, and trading in fresh white pork carcasses is poor.
Based on this analysis, amid the supply-demand contest and with the end of the month approaching, hog prices have continued to trend lower. Market sentiment is gradually turning cautious, with both bullish and bearish views present. Close attention should be paid to changes in the pace of marketings by large-scale pig producers in the days ahead. In theory, hog prices are still expected to see a “month-end rebound.”