At the beginning of 11 month, the domestic hog market has recently seen prices for “Brother Pig” fall relentlessly. Although traditional seasonal demand has entered its peak season, hog production capacity remains high, keeping supply pressure from market-ready pigs of suitable weight elevated. Demand has also been slow to recover, making it difficult to improve the supply-demand imbalance, and domestic hog prices continue to trend lower. After hog quotations fell below 9 yuan per kilogram, they continued their sluggish search for a bottom. In the short term, the market lacks effective support, and prices may fall further. Some institutions are concerned that hog prices may set a new low for the year.
As of 11/5, citing institutional monitoring, across the 7 key monitored production regions in northern and southern China and the 28 monitorable provinces and municipalities, the national average live hog price was 8.86 yuan/kg, down 0.08 yuan from yesterday. The price center continues to shift lower, down 26.7% year on year, with hog prices at a relatively low level for the same period historically. In particular, the price is only 0.23 yuan/kg away from this year's low of 8.63 yuan/kg, and hog prices are about to set a new annual low!
By region, on month 11, day 5, hog prices in domestic markets across the north and south continued to fall in most areas. The average price for hogs shipped for slaughter was close to 8.9 yuan/kg in Hebei, Beijing, Tianjin and other areas. Hog prices across the north and south ranged from 8.2~10.55 yuan/kg, with Guizhou lowest and Guangdong highest. Mainstream hog prices fell to 8.5~9 yuan/kg!
Currently, hog prices in northern and southern markets have generally fallen below 9 yuan/kg. In traditional production and sales markets, prices in Heilongjiang, Jilin, and Liaoning have fallen to 8.55~8.8 yuan/kg; prices in Shanxi and Hebei are 8.7~8.9 yuan, and prices in Shaanxi and Gansu are 8.6~8.75 yuan. In southern markets, prices in Sichuan and Chongqing have fallen to 8.75~8.8 yuan; prices in Shandong and Anhui are 8.75~8.9 yuan, prices in Jiangsu and Zhejiang are 8.9~10 yuan, prices in Henan are 8.75 yuan/kg, and prices in the Guangdong-Guangxi market are 8.9~10.55 yuan/kg!
Based on this analysis, on 11 month 5, the live pig market fell across the board. Bearish and price-stabilization expectations were relatively strong, and the market faced pressure from an imbalance between supply and demand. Amid a mismatch between production and sales, domestic pig prices may continue to adjust downward!
On the supply side, it is reported that earlier excessive optimism led to continued market holding and secondary fattening. During the traditional peak-demand months of September and October, demand at the margin fell short of expectations, farms performed poorly in completing sales, and pressure from lagging production capacity increased sharply! Recently, the average weight of hogs at sale has risen, with the sale weight increasing to 124.71 kilograms last week. Stocks of medium and large hogs are ample, further intensifying supply pressure! As the weather gradually cools, hogs gain weight more quickly during fattening, and the risk of disease at pig farms increases. Pig farms in the wider market are showing a stronger tendency to panic and sell. As for large-scale corporate hog producers, last month, a survey by an industry organization found that they completed 98.25% of their planned sales. This month’s sales plan is up 2.56% month on month. However, given the fewer sale days this month, average daily sales are up by nearly 6% month on month, and the pressure from excess hog supply is considerable!
On the demand side, as the weather turned cooler this month, demand gradually recovered at the margin, and the slaughterhouse operating rate also exceeded 31%. However, the actual increase in demand was limited. Domestic sales, multi-household consumption by urban residents, outdoor dining, and demand from catering and group meals remained weak. In addition, as dietary habits change, households are increasingly substituting other foods, limiting the increase in pork demand. Meanwhile, the rising average weight of live hogs at slaughter and the increased average weight of slaughtered hogs further strengthened pork supply capacity. Frozen pork was also shipped out successively, putting further pressure on the buying and selling of fresh pork in the market. This limited slaughterhouses’ ability to take in hogs.
Based on this analysis, amid an oversupply, the hog market is sluggish. In particular, average hog slaughter weight is rising, and producers lack confidence in actively holding back hogs from sale. Under continued market losses, various types of producers still need to generate cash and replenish funds, further intensifying the concentration of hog supply! Therefore, in the short term, the market may continue to seek a bottom, and the average price of standard-weight hogs may fall to a new low for the year. However, as the month enters its latter part, supply pressure is expected to ease, demand to improve at the margin, and market confidence to recover, giving hog prices the prospect of stabilizing and rebounding!