In early 11 month, with the Beginning of Winter solar term approaching, seasonal demand in the domestic consumer market has been recovering slowly recently! After the National Day holiday, reduced population mobility left household demand sluggish, and the operating rate of slaughterhouses gradually fell to around 30%. However, as temperatures cool, residents’ demand to put on fat has gradually recovered, and seasonal demand has also gradually improved. So far, the operating rate of sampled slaughterhouses has rebounded to 31.09%, and slaughterhouse orders have increased, but the increase in demand is relatively limited! Consumption is providing somewhat insufficient support for hog prices!
On the one hand, the average weight of hogs shipped for slaughter has risen, and the share of large hogs in market inventories has increased. In addition, with disease incidents at pig farms in multiple areas becoming more frequent recently, farmers have accelerated the culling of low-efficiency sows, while hogs purchased earlier for secondary fattening are also being actively sold off. The average slaughter weight of hogs has increased, further strengthening the market supply of pork, with fresh pork supplies remaining high;
On the other hand, as the fourth quarter begins, slaughterhouses had earlier bought and processed pork for storage when prices were low, leaving frozen pork inventories relatively high. In addition, frozen pork has been gradually released onto the market recently. This is squeezing the sales and purchasing space for fresh pork and is somewhat suppressing slaughterhouse operating rates!
At present, pork demand is recovering slowly, but there is no clear increase in consumer market demand! Meanwhile, on the supply side, farms have many planned hog shipments, and pressure from oversupply remains high!
According to institutional research and analysis, last month, shipments from large-scale pig enterprises increased by 1.91% month on month, while consumer demand fell seasonally during the month, resulting in a pattern of rising supply and falling demand! In addition, losses at independent pig farms intensified price-cutting, and more farms sought to liquidate and exit. During the month, leading pig enterprises completed only around 98.25% of their shipment plans, with some capacity continuing to defer shipments! According to cited data monitoring and analysis, in 11 month, large-scale pig enterprises increased shipments. This month, the shipment plans of the 173 monitored pig enterprises rose to 1519.67 ten thousand head, an increase of 2.56% month on month. In particular, there are 30 shipment days this month, with the average daily shipment volume increasing by nearly 6% month on month, keeping supply capacity high!
Based on this analysis, the domestic hog market is currently facing a situation of “increases in both supply and demand.” However, market imbalance remains pronounced, with production and sales out of sync! In particular, farms have many planned shipments, while the risk of episodic disease has increased. Losses at pig farms have deepened, and farms are more inclined to liquidate and exit, highlighting the pressure from the mismatch between production and sales!
With supply and demand fundamentals bearish, citing data monitoring and analysis, as of 11 month 4, the national average price for hogs weighing over three-way crossbreeds at the farm gate was 8.94 yuan/kg, down 0.07 yuan. Markets across most of the north and south continued to weaken, and the center of hog prices fell significantly, down nearly 27.4% year over year. The market showed a “collapse” in prices…
Data monitoring shows that across 7 production regions in northern and southern China, hog prices in most of the 28 monitored areas fell below 9 yuan/kg. Hog prices in Northeast, North, Northwest, and Southwest China, as well as Central China, generally fell to 8.3~9.15 yuan/kg. Prices in many parts of East China also successively fell below 9 yuan/kg, and the market saw a “breakdown” in prices!
Looking ahead, the current oversupply is difficult to improve, pessimism continues to prevail in the market, and demand lacks effective marginal support. Hog prices may continue to grind lower, with the price center likely to fall further. So, when will the “turning point” for a rise in hog prices arrive? Major institutions believe that after the latter part of 11 month, as seasonal demand improves further and the peak period for curing meat arrives in the downstream market, domestic hog prices may stop falling and recover. However, given excessive pressure on the supply side, the market may mainly see a bottoming-out recovery, and the outlook for a hog price rebound in the fourth quarter remains poor!