As 10 month draws to a close, the domestic live hog market has seen a sharper-than-expected decline during the traditionally strong “Silver October” period. At the start of the month, amid the holiday atmosphere, the combined quote for standard pigs briefly rebounded to 10.25 yuan/kg. Unfortunately, that rise was short-lived. As the holiday atmosphere faded, more farms sent pigs to market and prices resumed their decline. After the National Day holiday, demand gradually weakened at the margin and consumer demand continued its customary decline. Meanwhile, supply capacity kept increasing, and producers across different farming sectors were keen to sell, sending the live hog market into a steep decline!
As of 10 month 31, the national average farm-gate price for lean-type live hogs of the three-way crossbreed was 9.07 yuan/kg, down 0.01 yuan from yesterday. The decline in pig prices has slowed, and the market is gradually stabilizing. However, prices remain low for the year. In particular, prices have fallen by more than 11.5% so far this month, bringing them close to the year's low!
By region, in the domestic market, the average ex-farm price of hogs in the key monitored 28 northern and southern regions was close to that in Beijing, Tianjin and Hebei, at 9.05 yuan/kg. Quotations across most northern and southern regions were 8.5~10.55 yuan/kg. Xinjiang had the lowest quotation, while Guangdong had the highest. Mainstream hog quotations across the north and south were 8.8~9.4 yuan/kg, and the market center of gravity gradually shifted downward!
Specifically, in the northern regions, hog quotations in the Northeast, North China and Northwest markets are currently mainly stable. Quotations in Heilongjiang, Jilin and Liaoning are 8.8~9.15 yuan/kg; those in Shanxi and Hebei are 8.9~9.05 yuan; and those in Shaanxi and Gansu are 8.9~9.3 yuan/kg! In the southern market, quotations in Sichuan and Chongqing are currently 8.8~8.9 yuan; those in Shandong and Anhui are 9.1~9.2 yuan; those in Jiangsu and Zhejiang are 9.25~9.4 yuan; Henan is at 9 yuan; Hunan is at 8.85 yuan; and quotations in Guangdong and Guangxi are 8.95~10.55 yuan/kg!
Currently, hog prices are mostly moving sideways. Across the northern and southern regions, the market on 10 month 31 presented a picture of “5 rises and 12 falls.” The scope of price declines narrowed, while increases became more widespread. Hog price declines have “stalled,” and the market is showing a standoff!
In terms of supply and demand, sow inventories were high in the earlier period. In particular, at the end of last year, sow inventories stood at 3961 ten thousand head, far above the revised normal holding level. In addition, the productivity of domestic sow herds generally reached around 26 head, further strengthening the supply capacity of market hogs! As a result, during the traditional “Golden September and Silver October,” hog supply increased rather than decreased. Furthermore, with consumer demand weak in 9 month and market stocking ahead of the holiday subdued, some pig companies slowed their shipments, and the lagged effect of production capacity further intensified pressure from this month’s hog shipments! Since 10 month, outbreaks of disease at pig farms have increased, losses from fattening hogs have deepened, the domestic price spread between standard and heavyweight hogs has narrowed, and shipments of frozen pork have increased. Reports from group pig companies indicate slower shipments, leaving considerable pressure on the supply side. At the end of the month, group pig companies are likely to ramp up shipments to meet targets!
From the demand perspective, consumer demand is currently recovering slowly. However, due to changes in dietary habits and increased substitution in the market, the marginal recovery in demand has been slow. Feedback on the purchase and sale of white pork in downstream markets has been generally lackluster. In particular, the market expects ample pork supplies, so there is little incentive to stockpile. Most mainstream slaughterhouses are primarily operating based on orders, and demand lacks clear support!
However, over the past two days, as month-end approaches, there have been some differences in the pace of live hog shipments. In some producing regions, group pig enterprises have gradually completed their shipment plans. At month-end, the market has seen some reduction in shipments! In addition, live hog prices have remained relatively low, and some independent pig farms are reluctant to sell. With the weekend approaching, demand is providing some support!