There is less than 10 month remaining as month-end approaches. In China’s livestock and poultry farming sector, the live hog market has continued to languish, with prices falling in an “out-of-control” slide! The traditional “Golden September and Silver October” has completely lost its luster, and pig prices are showing a “peak season without a peak” pattern! Earlier, at the start of Golden September, supported by the back-to-school season, pig prices briefly rebounded to 11.09 yuan/kg. Unfortunately, prices then began a “wave of declines.” Although the Mid-Autumn Festival and National Day holidays both came and went, the downward trend in pig prices has been difficult to stop. In particular, after National Day, prices continued to edge down, pushing the farming sector into a period of deep losses!
According to data monitoring and analysis, on 10 30, the national average price for slaughtered lean-type,crossbred three-waylive hogs was 9.08 yuan/kg, down 0.08 yuan from yesterday. Pig prices continued to retreat, with a cumulative decline of 18.12% compared with the start of last month! According to industry surveys, as of this week, the average loss per hog for China’s mainstream farrow-to-finish operations had increased to around 307 yuan, putting the sector into a “bottoming-out” phase. So how will pig prices move next? Can the “Second Brother” no longer hold at 9 yuan/kg? An analysis follows:
According to the data, pig prices are currently continuing to fall across the board in northern and southern China, in the 28 key provinces and cities being monitored. Mainstream live hog quotations are down 0.05~0.2 yuan/kg. The average live hog price is close to 9.1 yuan/kg in Shandong. Live hog quotations in the north and south are 8.45~10.55 yuan/kg, with Xinjiang the lowest and Guangdong the highest! In mainstream domestic markets, live hog quotations are hovering at 8.8~9.45 yuan/kg, and the live hog market is showing a phase of declines across both the north and south!
As the saying goes, when something unusual happens, there is usually a reason. In my view, the deeper logic behind this peak season without strong pig prices is an increasingly pronounced imbalance between market supply and demand!
From the supply side, although the breeding sow herd was gradually reduced last year, falling from 4074 ten thousand head to 3961 ten thousand head, the year-end breeding sow herd of 3961 ten thousand head still far exceeded the newly revised normal reserve level of 3750 ten thousand head! Based on current herd changes and the accelerated reduction in the breeding sow herd in the fourth quarter of last year, in theory, supply pressure for live pigs may ease during this year’s “golden September and silver October”! However, actual feedback shows that over the past two months, large-scale pig farming groups have increased their month-on-month shipments. In 10, planned shipments by pig enterprises above designated size increased by 1.91% month on month.
On the one hand, although the breeding sow herd was reduced earlier, the production capacity base was high, and sow productivity improved substantially, so implicit supply pressure from production capacity is currently considerable. On the other hand, with insufficient marginal support from demand and market expectations uniformly bullish earlier, producers kept pigs on farms longer to increase their weight, while secondary fattening operations entered the market on a rolling basis. As the weather cools, pig weight gain during fattening accelerates and the risk of disease at pig farms increases, further strengthening supply capacity and intensifying the fundamentals of high production capacity being released in stages!
On the demand side, the peak season for pork consumption has been lackluster. Before the Mid-Autumn Festival, demand received support from the holiday, and slaughterhouse operating rates rebounded. However, the increase during the month was extremely limited, household demand lacked marginal support, and consumption of substitutes increased! Some pig enterprises were constrained in completing their average monthly shipment plans. In 10, after the National Day holiday, support from consumption weakened further, and slaughterhouse operating rates fell to around 30%. Although order volumes at slaughterhouses increased slightly since the latter half of 10, the increase was extremely limited! In addition, frozen pork has recently been released for sale in various regions, further limiting the recovery in slaughterhouse operating rates!
Based on this analysis, supply and demand for live pigs have both changed in stages: supply has increased month on month, diverse types of producers have a strong need to recoup funds through sales, and their willingness to ship is high; meanwhile, demand has declined month on month, pork trading has been sluggish, and more frozen pork has been released for sale! With these opposing movements, the fundamentals of domestic pig prices are bearish, and the price center continues to fall!
Now, as 10 draws to a close, pig prices have fallen to 9.08 yuan/kg. With market sentiment weak, prices remain under pressure to break lower. In this downturn, prices for “Pig Brother” are likely to fall below 9 yuan/kg. Going forward, watch for changes in the shipment pace of large pig farming groups!
According to data monitoring and analysis, on 10 30, the national average price for slaughtered lean-type,crossbred three-waylive hogs was 9.08 yuan/kg, down 0.08 yuan from yesterday. Pig prices continued to retreat, with a cumulative decline of 18.12% compared with the start of last month! According to industry surveys, as of this week, the average loss per hog for China’s mainstream farrow-to-finish operations had increased to around 307 yuan, putting the sector into a “bottoming-out” phase. So how will pig prices move next? Can the “Second Brother” no longer hold at 9 yuan/kg? An analysis follows:
According to the data, pig prices are currently continuing to fall across the board in northern and southern China, in the 28 key provinces and cities being monitored. Mainstream live hog quotations are down 0.05~0.2 yuan/kg. The average live hog price is close to 9.1 yuan/kg in Shandong. Live hog quotations in the north and south are 8.45~10.55 yuan/kg, with Xinjiang the lowest and Guangdong the highest! In mainstream domestic markets, live hog quotations are hovering at 8.8~9.45 yuan/kg, and the live hog market is showing a phase of declines across both the north and south!
As the saying goes, when something unusual happens, there is usually a reason. In my view, the deeper logic behind this peak season without strong pig prices is an increasingly pronounced imbalance between market supply and demand!
From the supply side, although the breeding sow herd was gradually reduced last year, falling from 4074 ten thousand head to 3961 ten thousand head, the year-end breeding sow herd of 3961 ten thousand head still far exceeded the newly revised normal reserve level of 3750 ten thousand head! Based on current herd changes and the accelerated reduction in the breeding sow herd in the fourth quarter of last year, in theory, supply pressure for live pigs may ease during this year’s “golden September and silver October”! However, actual feedback shows that over the past two months, large-scale pig farming groups have increased their month-on-month shipments. In 10, planned shipments by pig enterprises above designated size increased by 1.91% month on month.
On the one hand, although the breeding sow herd was reduced earlier, the production capacity base was high, and sow productivity improved substantially, so implicit supply pressure from production capacity is currently considerable. On the other hand, with insufficient marginal support from demand and market expectations uniformly bullish earlier, producers kept pigs on farms longer to increase their weight, while secondary fattening operations entered the market on a rolling basis. As the weather cools, pig weight gain during fattening accelerates and the risk of disease at pig farms increases, further strengthening supply capacity and intensifying the fundamentals of high production capacity being released in stages!
On the demand side, the peak season for pork consumption has been lackluster. Before the Mid-Autumn Festival, demand received support from the holiday, and slaughterhouse operating rates rebounded. However, the increase during the month was extremely limited, household demand lacked marginal support, and consumption of substitutes increased! Some pig enterprises were constrained in completing their average monthly shipment plans. In 10, after the National Day holiday, support from consumption weakened further, and slaughterhouse operating rates fell to around 30%. Although order volumes at slaughterhouses increased slightly since the latter half of 10, the increase was extremely limited! In addition, frozen pork has recently been released for sale in various regions, further limiting the recovery in slaughterhouse operating rates!
Based on this analysis, supply and demand for live pigs have both changed in stages: supply has increased month on month, diverse types of producers have a strong need to recoup funds through sales, and their willingness to ship is high; meanwhile, demand has declined month on month, pork trading has been sluggish, and more frozen pork has been released for sale! With these opposing movements, the fundamentals of domestic pig prices are bearish, and the price center continues to fall!
Now, as 10 draws to a close, pig prices have fallen to 9.08 yuan/kg. With market sentiment weak, prices remain under pressure to break lower. In this downturn, prices for “Pig Brother” are likely to fall below 9 yuan/kg. Going forward, watch for changes in the shipment pace of large pig farming groups!