Prices have fallen—and fallen hard. Pig prices are plunging “out of control”! Recently, price increases have been hard to find, and the market has continued to slide. The domestic hog market has once again seen a peak season that is not peaking, with the market’s center of gravity shifting further down. Pig prices have repeatedly hit new lows for the second half of the year, and farming losses are becoming increasingly severe! So far, there are still no signs of a market rebound, and pig prices may continue to trend weakly. Does this mean the seasonal rise in month 11 has “failed to materialize”? Here is the analysis:
According to data monitoring, as of month 11 day 3, the national average ex-farm price for standard-weight, lean-type live pigs of the three-way crossbreed was 9.01 yuan/kg, down 0.05 yuan. Compared with 10 month start, when the price was 10.25 yuan/kg, pig prices had fallen by 12.1%; compared with 9 month start, when the price was 11.09 yuan/kg, pig prices had fallen by 18.76%. Pig prices are now close to their low for the year. Last week, the average loss per head for domestic farrow-to-finish farms increased to 303.74 yuan/head. Farmers are facing a slow, painful squeeze, and market loss pressures may increase further!
By region, among the 28 regions monitored nationwide, across the 7 production regions in the north and south, only South China saw a slight strengthening in quoted prices, while prices in the Southwest market were relatively stable. Live pig prices generally fell in East China, Central China, Northwest China, North China, and Northeast China. Mainstream live pig prices fell by 0.05~0.2 yuan/kg, and prices in many areas once again fell below 9 yuan/kg!
Currently, in the northern region, only Heilongjiang and Gansu have prices hovering at 9 yuan/kg. Hog prices in Shanxi, Hebei, Jilin, Liaoning and other areas have generally fallen below 9 yuan/kg, with mainstream quotations down to 8.4~8.95 yuan/kg. The market is showing a sharp downward trend!
In the southern market, mainstream prices in the Southwest and Central China have generally fallen below 9 yuan/kg. In East China, a traditionally high-priced market, hog prices have also gradually dropped to around 9 yuan/kg. Currently, quotations in Sichuan and Chongqing are 8.85~8.9 yuan/kg; quotations in Shandong and Anhui have fallen to 9~9.15 yuan; Henan is quoted at 8.9 yuan, Hunan at 8.8 yuan, and Zhejiang at 9.35 yuan/kg……
Thus, on the 11 month 3 day, hog prices came under pressure and fell, with the market continuing to languish. The following is an analysis of the factors behind the decline in hog prices:
On the demand side, yesterday, in Beijing and Shanghai, major domestic consumer cities above the designated size, quotations for white-strip pork in Beijing were adjusted up and down by 0.1~0.2 yuan, with market feedback indicating average sales. In Shanghai, white-strip pork quotations fell to around 11.4~11.7 yuan/kg, and markets in many areas reported weak transactions. According to institutional research, yesterday the price of white-strip pork at the top three domestic levels was 12.47 yuan/kg, and the price spread between live hogs and carcasses was 3.7 yuan/kg. Mainstream slaughterhouses were incurring substantial losses, producing to match sales, with little improvement in operating rates. In particular, sample slaughterhouses currently have high frozen pork inventories. Last week, the frozen pork storage capacity utilization rate was 31.6%; frozen pork has been gradually shipped out, further suppressing purchases and sales of fresh pork and limiting slaughterhouse operations. Sample data monitoring shows that the current centralized operating rate of slaughterhouses is around 30.89%, indicating that marginal demand support is somewhat insufficient!
In terms of supply, yesterday, hog shipments decreased in the Northeast, Central China and Southwest China, the main production regions across northern and southern China. However, shipments increased in East China and Northwest China. Regarding the pace of hog arrivals at slaughterhouses, in the Northeast, farms shipped smoothly, making procurement relatively easy for large slaughtering companies, and large-scale hog producers sold at relatively low prices. In East China and Central China, willingness to ship hogs was relatively strong, and independent farms were eager to sell. Local slaughterhouses brought forward their planned procurement and took advantage of the situation to push prices down. In the southern market, in Southwest and South China, procurement was of average difficulty for slaughterhouses, and trading sentiment was slightly cautious. At present, market sentiment is mainly bearish or stable.
According to industry analysis, demand provides limited support and consumer demand remains somewhat weak. In addition, biological safety risks at pig farms have increased recently. Independent producers and secondary-fattening farms are more willing to sell, and there is little sign of restocking with standard-weight pigs when prices dip. Large integrated pig producers are mostly maintaining their normal sales pace. The market has yet to ease from a pattern of strong supply and weak demand, and pig prices may continue to fluctuate downward!
However, as quotations for standard-weight pigs approach their lowest level of the year, support at the market bottom may gradually recover. In particular, the seasonal peak demand period is approaching. As the weather turns cooler, domestic demand may improve and sentiment among producers may recover. In the middle to latter part of 11 month, pig prices may have a chance to strengthen after a late-period uptick!