Down, down—the decline in pig prices is “endless”! In the latter part of 10 month, domestic live hog prices continued their weak, “bottoming out” trend today, with the market’s center of gravity shifting further downward. Hog farmers are facing a situation of “slow, grinding losses.” In particular, long-term losses from fattening hogs have put mainstream producers under varying degrees of financial pressure. More are opting to sell and exit the market, and small-scale independent farms are increasingly willing to sell. Some secondary-fattening operators who previously entered the market to restock with standard-weight feeder pigs are also shipping them out, leaving live hog supply ample. However, marginal support from demand is under pressure, and hog prices lack an opportunity to rise. The market may remain in a “relentless decline”!
According to reports, industry organizations estimate that on 10 month 27, the national average ex-farm price of lean-type three-way crossbred pigs was 9.29 yuan/kg, down 0.04 yuan from the previous day. Pig prices were down 22.3% year on year, and the live pig market fell to its lowest level since the second half of the year. Compared with the peak at the beginning of last month, prices had fallen by a cumulative 16.23%. During the “Golden September and Silver October” months, pig prices declined steadily, with the market showing a peak-season slump!
According to regional feedback, the hog market is “all in the red” in 28 key monitored regions across the north and south of the country! Hog prices have fallen across the board in East China, Central China, and North China, while prices have mostly held steady in South China, Southwest China, Northwest China, and Northeast China, with slight mixed movements in some areas! The national average price for hogs shipped to market is close to the level in Heilongjiang. There is no significant price gap between production and sales markets in the north and south, while the inversion is pronounced in some areas. In particular, hog prices in Southwest China have successively fallen below 9 yuan/kg, with the market showing a pattern of sharp declines below key levels!
Currently, domestic pig prices are falling “without pause.” After the National Day holiday, the market has been on a downward slide, and the average live pig price continues to decline. It is now just 8.63 yuan per kilogram above this year’s low, with the gap narrowing to 0.66 yuan per kilogram! With pig prices under pressure, will they fall below the “previous low”? Here is a detailed analysis:
In terms of demand, the seasonal peak has so far been lackluster. Although the weather is gradually turning cooler, and the Start of Winter solar term is drawing nearer after Frost’s Descent, the operating rate at sampled slaughterhouses is currently 30.46%, indicating limited changes in demand and no substantial increase in consumption. On the one hand, as dietary habits change, residents are consuming more low-fat foods, reducing their willingness to consume pork. Meanwhile, supplies of alternatives such as beef, mutton, poultry, and aquatic products are ample, giving consumers more choices and reducing pork’s share of consumption. On the other hand, with the arrival of the fourth quarter, slaughterhouses are shipping frozen products that they had previously portioned and put into storage. This is taking up market space for fresh products, further limiting shipments of fresh pork carcasses and holding back the recovery in slaughterhouse operating rates.
On the supply side, the release of hog supplies driven by production momentum has yet to ease, and capacity remains at a seasonally high level! On the one hand, large-scale hog producers were slow to market hogs earlier, causing a sharp increase in the lagged pressure from capacity this month. Sampled hog producers’ marketing plans rose by nearly 2.45% month on month (Zhuochuang data). However, in the first half of this month, large-scale hog producers made slow progress in fulfilling their marketing plans. Amid increased disease risks at hog farms and deeper farming losses, more smallholder farms marketed hogs, limiting the marketing performance of large-scale hog producers. In the latter half of 10 month, large-scale hog producers faced considerable marketing pressure, and their willingness to sell hogs was relatively strong. On the other hand, the recent drop in temperatures has accelerated weight gain in hogs being fattened. Last week, the average weight of hogs marketed reached 124.49 kilograms, while the post-slaughter weight reached 93.93 kilograms, increasing the supply capacity of pork. In addition, supplies of frozen pork increased, further reinforcing the market’s oversupply situation!
Based on this analysis, demand is currently showing little marginal recovery, while supply-side pressure remains strong. At the end of the month, major pig-producing groups still have relatively low planned sales, and the imbalance between production and sales may persist, so hog prices may continue to fluctuate downward. However, based on past experience, major pig-producing groups may slow their sales pace at the end and beginning of the month. The scope for further price declines at month-end may therefore be limited. During this downturn, the quoted price for standard-weight hogs may be unlikely to fall below the previous low, with the price floor hovering around 9~9.1 yuan/kg. Pay close attention to changes in the pace of market buying and selling!