As 10 draws to a close, after the Frost’s Descent solar term, the weather is gradually turning cooler across northern and southern regions. Northern areas are being affected by cold air more frequently, bringing lower temperatures, which is favorable for pork consumption! However, in recent years, the peak season for pork demand has routinely failed to deliver a strong increase. Changes in the domestic population structure and a deepening aging trend, together with increasingly diverse diets and growing consumption of leaner meats, have weakened marginal demand for pork, and substitution in the market has become widespread!
In particular, after the National Day holiday, the festive atmosphere faded and people’s movement declined, bringing pork buying and selling back to normal. However, with the weather gradually turning cooler, the seasonal recovery in demand has been extremely slow. As of now, the operating rate at sampled slaughterhouses is 30.73%. Demand has recovered only modestly since the National Day holiday, and slaughterhouses have insufficient capacity to take in market-ready hogs of suitable weight! In particular, the frozen pork inventory capacity utilization rate at sampled slaughterhouses currently stands at 31.87%. Frozen pork is being shipped out gradually, further constraining shipments of fresh pork and exacerbating weak demand!
Unlike sluggish consumption, supplies of live hogs and pork are ample! In particular, in 10, major corporate hog producers have relatively large planned slaughter volumes. At the beginning of the month, holiday-related factors slowed slaughter by large-scale hog producers, while some production capacity held back last month is being released this month, further worsening the back-loaded supply situation! As the weather turns cooler, seasonal changes are intensifying stress responses in live hogs, and disease outbreaks at pig farms in many areas are becoming more frequent. Anxiety is spreading among producers. In particular, the average weight of hogs shipped this month continues to rise, and the share of medium and large hogs in inventory is increasing. Confidence in a rise in the market later on is weak among market participants and secondary-fattening operators. As losses from hog fattening continue to deepen, smallholder pig farms are increasing shipments. Across northern and southern regions, average monthly shipments by leading mainstream hog producers remain slow, and planned production releases have not been completed satisfactorily this month. As 10 draws to a close, some leading hog producers are rushing to increase shipment volumes!
As a result, amid the supply-demand imbalance, pig prices have recently continued their sluggish trend, with the average live pig price falling to 9.23 yuan/kg, and cumulative pig price declines this month nearing 10%! Market sentiment remains weak. With slaughterhouses adjusting prices, it is expected that on 10 month 29, the national live pig ex-farm quotation will fall to 9.16 yuan/kg. Pig prices are expected to continue their weak, bottoming-out trend. Looking ahead, attention should be paid at month-end to changes in the pace of shipments by group pig enterprises and in follow-through demand downstream!
In this regard, do you think pig prices can stop falling and rebound at month-end?