Late autumn has arrived, and early winter is just around the corner. It is now the first ten days of 11, with the Beginning of Winter solar term approaching. Yet the market remains quiet during the traditional peak season for pork consumption! Since the third quarter of this year, despite the traditional seasonal peak in demand, the market has been affected by ample pork supplies and changes in the domestic population structure. Consumers have a relatively strong preference for low-fat products, and alternative products are readily available. Sales and purchases of fresh pork have remained sluggish, and the expected seasonal pickup in pork demand has been insufficient. Meanwhile, the benefit from the earlier reduction in the breeding sow herd has been offset by improved productivity in sow capacity. Against this backdrop of supply-demand imbalance, domestic hog prices remain weak, with the market continuing to trade at low levels!
At present, the quoted price for standard-weight pigs has fallen to 9.01 yuan/kg, bringing hog prices close to their low for the year and deepening losses for producers. Based on the nearby corn quote of 1.08 yuan/jin, the hog-to-corn price ratio is around 4.17:1. Losses for mainstream farrow-to-finish operations may exceed 300 yuan, while losses at some smallholder farms may exceed 500 yuan per head!
According to industry analysis, hog prices have failed to strengthen during the peak season and are falling under market pressure, mainly because of an imbalance between supply and demand and ongoing mismatches between production and sales!
On the one hand, last month, planned hog marketings were relatively high. Large-scale pig enterprises planned to market 1508.18 million head. However, demand fell sharply month on month. In addition, seasonal weather changes led to more disease outbreaks at pig farms. Independent farms were eager to market their hogs, while group pig enterprises either completed their marketing plans or fell short of expectations. Some production capacity was marketed later than planned. In early 11, pressure from hog supply remained relatively high! Moreover, the average weight of recently marketed hogs rose to 124.71 kilograms, further increasing the supply capacity of pork. With frozen pork from domestic stocks being gradually released and frozen pork supply increasing, this also dampened the enthusiasm for buying and selling fresh pork, leaving the market under continued pressure from excess supply!
On the other hand, consumer demand was sluggish! As the weather turned cooler, residents ate out less, and there was a lack of holiday atmosphere to support demand during this period. The pace of people’s movements slowed, and urban restaurants and dine-in services saw no increase in demand. Downstream markets mainly replenished stocks to meet essential needs! In particular, with pork supply ample, traders focused on reducing volumes and stabilizing prices. Slaughterhouse operating rates struggled to rise, and the operating rate among sampled slaughterhouses was below 31%. Pork consumption showed insufficient follow-through!
Therefore, amid the tug-of-war between supply and demand, hog prices have recently continued to adjust downward. In particular, recent temperature declines have increased biosecurity risks at pig farms, further strengthening farmers’ willingness to market their hogs. Pressure from the release of production capacity has supported the ongoing bottoming-out trend in hog prices!
Following price adjustments by slaughterhouses, the price of three-way crossbred live pigs is expected to be 8.94 yuan/kg on 11 month 4. Going forward, attention should be paid to changes in market buying and selling activity, especially changes in sales by large-scale pig farming companies and slaughterhouse operating rates!