In China’s hog market, the “Silver October” month is now drawing to a close, and the domestic hog market has fallen into a “quagmire.” The market’s sluggish trend continues, and hog prices are slowly retreating! At present, the “Second Brother” has fallen back to “Grandma’s house,” with hog prices hitting a new low for nearly 4 months. The traditional peak consumption season has arrived, yet the trend of hog prices failing to rise during the peak season is becoming clear. Moreover, losses from hog fattening are deepening. Last week, according to Mysteel data monitoring, the average loss per head for domestically bred-and-raised hogs was 252.96 yuan. The breeding sector is facing a “cold winter,” and expectations for a rise in hog prices are growing stronger!
According to data monitoring and analysis, as of 10/26, the national average price for hogs ready for slaughter in the lean-type hog category was 9.33 yuan/kg, down 0.03 yuan from yesterday. Hog prices fell under pressure. Compared with 10.25 yuan/kg at the beginning of the month, prices dropped by nearly 9% during the month and were down 21.5% year over year! However, by region, hog prices suddenly rose in many areas on 10/26, and the decline narrowed further. So, what is the market outlook, and could hog prices turn a corner next? The analysis is as follows:
Citing data monitoring, the hog market posted both gains and losses across the 7 key production areas in the north and south and 28 provinces and municipalities monitored nationwide. Among areas reporting gains, hog prices in Henan, Beijing-Tianjin, Inner Mongolia, Hebei, Heilongjiang, Liaoning, and Xinjiang rose by 0.05 yuan/kg. Among areas reporting declines, prices in Anhui, Jiangsu, Fujian, Hainan, Shanxi, Jilin, Shaanxi-Gansu, and Yunnan-Guizhou fell by 0.05~0.4 yuan/kg, with notable catch-up declines in Hainan and Gansu!
National live hog prices are 8.55~10.8 yuan/kg. In Xinjiang, Chongqing, Guizhou, and Guangxi, quotes for standard-weight hogs fell below 9 yuan/kg, while in Fujian and Guangdong, quotes fell below 11 yuan/kg. Quotes in Zhejiang and Jiangsu held steady at 9.65~9.9 yuan/kg! At present, domestic live hog prices have generally fallen into the “9-yuan era”……
According to demand feedback, in the overnight market in Beijing and Shanghai—traditional domestic consumption cities—white pork carcass quotes in Beijing rose by 0.2 yuan. Market trading feedback was generally lackluster. Although temperatures fell, demand follow-through was ordinary! In the Shanghai market, mainstream white pork carcass quotes were around 12.4 yuan/kg. Market trading was ordinary, and supplies of white pork carcasses at wholesale markets decreased! At present, urban demand for domestic pork consumption has no clear increase, and market purchases are mostly driven by rigid demand. In the domestic sales market, pork trading feedback at rural fairs was ordinary. Although seasonal demand is in its peak season, pork consumption has no clear increase due to substitution by other consumption and changes in dietary structure. The marginal impact of consumption provides little support for hog prices!
In addition, with frozen pork inventories high, frozen goods are gradually being released onto the domestic market in the fourth quarter, leaving the outlook for pork supply loose. Traders are mostly seeking to maintain prices while reducing volume, while slaughterhouses, lacking sufficient marginal support from demand and facing a narrowing live-to-carcass price spread, have a strong inclination to push prices down!
In terms of supply, yesterday, group-affiliated pig farms in the north and south showed differing shipment trends. Shipments decreased in central China, but increased among leading pig companies in the northwest, east, and southwest! At present, major leading pig companies are shipping normally, and large-scale pig farms lack the willingness to cut shipments and drive up prices. In particular, as the weather turns cooler this month, live pigs are gaining weight faster during fattening. The average shipment weight of sampled pig companies rose to 124.49 kilograms last week, further increasing pressure on pork supply. Livestock producers have strong demand to recover funds and are highly willing to sell. At month-end, leading pig companies will still face shipment pressure! After all, according to institutional research, shipments by large-scale pig companies increased month on month this month. In addition, amid rising biosecurity risks in live-pig fattening, pig farms in the broader market are actively selling; changes in the structure of live-pig inventories and a narrowing price spread between standard and heavyweight pigs have reduced the willingness to hold pigs back. Supply-side pressure remains considerable!
Based on this analysis, given changes in supply and demand, current support for pig prices is insufficient, and the market is maintaining a bottoming-out range-bound trend! Although month-end is approaching, slaughterhouses in the north and south may gradually complete their monthly shipment plans. At month-end, group-affiliated pig companies may reduce shipment volumes, which could provide some support for pig prices! However, with supply remaining ample and marginal demand support unlikely to bring any substantial improvement, the live-pig market is still in a bottoming-out phase. A seasonal rise will require further changes in the supply-and-demand balance!