Recently, in China’s livestock and poultry farming sector, pig prices have followed a one-way downward trend! In my analysis, the market’s decline can be explained roughly as follows:
First, capacity built up earlier, exacerbating oversupply! Before the Mid-Autumn Festival and National Day, the market broadly expected pig prices to rise during “Golden September.” Against this backdrop, since the end of the second quarter, farmers have been particularly cautious about sending pigs to market. In particular, high temperatures during the dog days slowed weight gain in fattening pigs; supplies of finished pigs were tight, and the price gap between standard and heavier pigs was large, limiting the pace of market shipments! The lagged pressure from production capacity and supply increased sharply. In addition, the sow inventory base was high at the end of last year, while the number of newborn piglets continued to increase at the start of the year. These factors combined to strengthen supply during the traditional “Golden September and Silver October” period!
Second, pig fattening has been unprofitable for an extended period,pigpriceshave remained weak, and farmers are facing financial difficulties. Sow culling has accelerated. It is reported that sow inventories fell to 3602 ten thousand head at the end of the third quarter, compared with 3780 ten thousand head at the end of the second quarter, indicating a marked acceleration in capacity reduction! Low-priced sows are putting pressure on the market, further suppressing normal purchases and sales of standard pigs!
Third, domestic frozen pork inventories are high, and frozen pork is being shipped out successively! Because slaughterhouses previously processed pork and put it into storage, frozen pork inventories are relatively high. In the fourth quarter, frozen pork is being shipped out successively, further suppressing the purchase and sale of fresh carcasses!
Fourth, the marginal recovery in seasonal demand is weak, highlighting the trend of a lackluster peak consumption season! During the traditional September peak season, slaughterhouse operating rates recovered during the month under the influence of holidays. However, the increase in operating rates among the sampled slaughterhouses was limited. After the National Day holiday, demand also declined as usual, with less movement of people and sluggish trading in fresh carcasses. This further weighed on slaughterhouse operations, as the market's capacity to absorb demand for live hogs was insufficient!
Therefore, amid changes in supply and demand, hog prices have recently retreated, with the average domestic price for standard hogs falling to 9.07 yuan/kg. Farming losses have deepened; for a period, losses per head for farrow-to-finish farms were nearly 310 yuan. The market still faces downward pressure!
Fortunately, toward the end of 10, support at the market bottom strengthened slightly. After hog prices continued to fall, farming operations slowed their pace of sales somewhat, and demand picked up slightly over the weekend, improving market sentiment somewhat! However, supply and demand pressures remain undiminished, and hog prices still face considerable pressure!
According to data monitoring and analysis, following price adjustments by slaughterhouses, the live hog price is expected to be 9.07 yuan/kg on 11 month 1; attention should be paid to changes in the pace of supply and demand in the coming market!
First, capacity built up earlier, exacerbating oversupply! Before the Mid-Autumn Festival and National Day, the market broadly expected pig prices to rise during “Golden September.” Against this backdrop, since the end of the second quarter, farmers have been particularly cautious about sending pigs to market. In particular, high temperatures during the dog days slowed weight gain in fattening pigs; supplies of finished pigs were tight, and the price gap between standard and heavier pigs was large, limiting the pace of market shipments! The lagged pressure from production capacity and supply increased sharply. In addition, the sow inventory base was high at the end of last year, while the number of newborn piglets continued to increase at the start of the year. These factors combined to strengthen supply during the traditional “Golden September and Silver October” period!
Second, pig fattening has been unprofitable for an extended period,pigpriceshave remained weak, and farmers are facing financial difficulties. Sow culling has accelerated. It is reported that sow inventories fell to 3602 ten thousand head at the end of the third quarter, compared with 3780 ten thousand head at the end of the second quarter, indicating a marked acceleration in capacity reduction! Low-priced sows are putting pressure on the market, further suppressing normal purchases and sales of standard pigs!
Third, domestic frozen pork inventories are high, and frozen pork is being shipped out successively! Because slaughterhouses previously processed pork and put it into storage, frozen pork inventories are relatively high. In the fourth quarter, frozen pork is being shipped out successively, further suppressing the purchase and sale of fresh carcasses!
Fourth, the marginal recovery in seasonal demand is weak, highlighting the trend of a lackluster peak consumption season! During the traditional September peak season, slaughterhouse operating rates recovered during the month under the influence of holidays. However, the increase in operating rates among the sampled slaughterhouses was limited. After the National Day holiday, demand also declined as usual, with less movement of people and sluggish trading in fresh carcasses. This further weighed on slaughterhouse operations, as the market's capacity to absorb demand for live hogs was insufficient!
Therefore, amid changes in supply and demand, hog prices have recently retreated, with the average domestic price for standard hogs falling to 9.07 yuan/kg. Farming losses have deepened; for a period, losses per head for farrow-to-finish farms were nearly 310 yuan. The market still faces downward pressure!
Fortunately, toward the end of 10, support at the market bottom strengthened slightly. After hog prices continued to fall, farming operations slowed their pace of sales somewhat, and demand picked up slightly over the weekend, improving market sentiment somewhat! However, supply and demand pressures remain undiminished, and hog prices still face considerable pressure!
According to data monitoring and analysis, following price adjustments by slaughterhouses, the live hog price is expected to be 9.07 yuan/kg on 11 month 1; attention should be paid to changes in the pace of supply and demand in the coming market!