Recently, pig prices have continued to trend weakly in the live hog market. The market’s excessive optimism about prices ahead of the two holidays earlier on led to a significant backlog of production capacity among producers! Newborn piglet numbers continued to rise in the 3-4 months. Meanwhile, at the end of the second quarter and beginning of the third, secondary fattening operations entered the market in waves. With hog fattening continuing to incur losses, excessive optimism about the market outlook intensified producers’ reluctance to sell and tendency to hold hogs back. In addition, high temperatures during the summer heat limited weight gain in standard-weight hogs. As the weather gradually cooled, pressures from multiple sources materialized at once. During the traditional “Golden September and Silver October” months, supply capacity remained high. However, seasonal peak demand was weaker than expected, and supply and demand were severely imbalanced, pushing the center of pig prices further downward.
Currently, the live pig market remains generally weak and volatile, and the situation of supply exceeding demand has yet to improve!
On the supply side, the average live weight of pigs marketed continues to rise, and the supply of standard-weight pigs is also at a high level. In addition, there was considerable stockpiling and secondary fattening earlier, causing the average live weight of pigs marketed to continue rising in phases and the proportion of medium- and large-sized pigs in inventory to increase. The price spread between standard-weight and fattened pigs has narrowed, dampening market confidence in price increases. Also, due to weather impacts and seasonal changes, disease outbreaks at pig farms have become more frequent, prompting further increases in market-wide pig farm sales. This has constrained the pace of sales by large-scale pig enterprises, with leading and larger-than-leading enterprises selling slowly during the month and more cases of involuntary price cuts to increase sales!
On the demand side, after the National Day holiday, pork purchasing and sales entered a “slack period.” Household demand in the domestic market was slow to pick up, while urban mobility declined and tourism consumption cooled, leaving the trading of fresh pork carcasses sluggish. The market was mainly driven by restocking to meet essential demand, with slaughterhouse orders seeing only limited growth. Meanwhile, frozen pork from within China continued to be shipped, putting pressure on the fresh pork market and further suppressing slaughterhouse operating rates. With ample supply capacity, hog deliveries to slaughterhouses proceeded smoothly, and the spread between carcass purchase and sale prices at domestic slaughterhouses narrowed. Some slaughterhouses continued to take advantage of the situation to push prices down, further worsening market weakness.
Now, with the end of 10 approaching, the live hog market continues to adjust weakly, and quotes for standard-weight hogs have fallen to 9.07 yuan per kilogram. The market is showing some signs of stabilization. On the one hand, the shift in the center of hog prices may encourage sellers to hold firm on prices. At the end of the month and the beginning of the next, leading and larger hog companies may reduce the number of hogs they bring to market, potentially strengthening support at the market bottom. In addition, temperatures are falling further, and pork demand is expected to gradually improve at the margin. The traditional peak season for curing pork is also approaching, which may strengthen market confidence in the outlook.
Based on this analysis, amid the interplay of supply and demand, the live hog market is currently expected to remain broadly stable with minor fluctuations. Influenced by slaughterhouse price adjustments, on 11/1, the quoted price for standard-weight hogs of the three-way crossbred breed is 9.07 yuan/kg. Going forward, attention should be paid to the pace of market trading!
Overview of pig prices across provinces and regions in northern and southern China (for industry exchange reference only)