As 10 month draws to a close, the domestic live pig market’s traditional “Golden September and Silver October” is nearing its end. During this year’s peak consumption season, pig prices fell more than expected, prompting many farmers to lament that “Golden September turned into Copper September, and Silver October became Iron October.” During the traditional seasonal peak in demand, the expected rise in pig prices failed to materialize. Standard pig prices are approaching their lows from the beginning of the year, and farming losses continue to deepen. Currently, the average loss per head for mainstream self-bred and self-raised pigs exceeds 300 yuan! Moreover, 10 month is about to end, with no clear signs of a rise in pig prices. In 10 month, “Brother Second Pig” may keep “falling into the red” through the end of the month…
According to cited data monitoring, as of 10 month 29, the national average farm-gate price for lean-type standard pigs from three-way crossbreeds was 9.16 yuan per kilogram, down 0.07 yuan from yesterday. Pig prices fell under pressure, and the market continued to show a broadly weak trend. Prices were nearly 27% lower year on year, reaching a relatively low level for the same period. In addition, based on Linchi’s corn quotation of 1.075 yuan per jin, the pig-to-grain ratio was 4.26:1. Hog fattening has entered a phase of “a blunt knife slowly cutting flesh.” Pig prices are in “the darkness before dawn,” but it remains unclear when the light will arrive.
According to regional feedback, across the 7 production areas in the north and south of China and the 28 key monitored regions, the average price of hogs shipped to market is close to 9.15 yuan/kg in Jiangsu. Hog prices quoted in the north and south range from 8.5 to 10.65 yuan/kg. In an increasing number of regions, hog prices have fallen below 9 yuan/kg! In traditional production and sales markets, current quotes in the northern regions of Heilongjiang, Jilin, and Liaoning range from 9.05 to 9.2 yuan/kg; quotes in Shanxi and Hebei have fallen to 9.1 yuan, while those in Shaanxi and Gansu have fallen to 8.8 to 9.25 yuan/kg. In the southern market, current quotes in Sichuan and Chongqing range from 9 to 9.05 yuan; quotes in Jiangsu and Zhejiang have fallen to 9.15 to 9.65 yuan, those in Shandong and Anhui are 9.2 yuan, and those in Henan are 9.2 yuan. Quotes in Guangdong and Guangxi range from 9.05 to 10.65 yuan/kg!
At present, hog prices continue their “monotonous” downward trend, with the decline gathering pace and prices repeatedly hitting new lows since the second half of the year! The downward pressure on hog prices still stems from an imbalance between production and sales!
On the supply side, although the breeding sow inventory was reduced steadily last year, capacity reduction at major hog producers had been slow, while sow productivity improved. PSY at leading hog producers has reached more than 26 head. As a result, despite a decrease in the number of breeding sows, the capacity to supply commercial hogs has increased! In particular, over the past two months, major hog producers have continued to increase their shipment plans. Earlier excessive market optimism has exacerbated the lag in capacity adjustment. During the “Golden September and Silver October” months, hog supply is being released as a result of production inertia, and shipment pressure on major hog producers remains high! In particular, according to data cited from an industry source, Mysteel reports that 173 large-scale hog producers plan to ship 1508.18 ten thousand head this month, up 1.91% month on month!
In addition, among independent pig farms, changing weather and sharp temperature fluctuations this month have increased the impact of pig diseases on hog fattening. Market confidence in price increases is also weak. Falling temperatures are accelerating hog weight gain, and secondary-fattening farms have begun shipping hogs. Independent farms are increasingly willing to realize funds, further adding to supply pressure!
On the demand side, it is reported that demand recovered slowly in 9 month due to the Mid-Autumn Festival and National Day holidays. Slaughterhouses stocked up ahead of the holidays, and the operating rate rose to 34.03%. However, after National Day, demand declined as expected. Changes in population structure and shifts in dietary habits also weighed on pork demand during the month. The operating rate of slaughterhouses was unlikely to improve substantially, leaving them with insufficient demand for market hog supplies. However, this month’s planned hog shipments increased, and average shipment weight rose. Combined with the high-volume release of frozen pork stocks in China, this further intensified the imbalance between market supply and demand and increased downward pressure on hog prices!
Based on this analysis, the bearish supply-and-demand fundamentals have put downward pressure on domestic hog prices. With slaughterhouses adjusting their purchase prices, the market is expected to remain generally stable but biased toward weakness over the next 1-2 days. The live hog market may continue to search for a bottom. Close attention should be paid to the pace of shipments at the end of the month and changes in slaughterhouse operating rates!