At the start of 11月, China’s domestic live pig market has recently seen pig prices “plummet.” The average live pig price fell more than expected. During the traditional seasonal peak, prices declined instead of rising, and the market has continued to hit new lows since the second half of the year began! At the start of 11月, the live pig market remains sluggish, with an upward trend difficult to establish. Pig prices remain weak as they probe for a bottom, and the average live pig price continued to retreat after falling below 9 yuan/kg, now just one step away from this year’s low. So how will pig prices move from here, and what will be the “floor” for prices in 11月份? A detailed analysis follows:
According to monitoring by an institution, as of 11月6日, the average price of standard pigs of the domestic Duroc-Landrace-Yorkshire crossbreed was 8.74 yuan/kg, down 0.12 yuan/kg from the previous day. The decline in pig prices widened further. The average live pig price has fallen a cumulative 21.2% from its peak at the start of 9月, and 14.73% from the start of 10月. Prices are approaching this year’s low of 8.63 yuan/kg, with the market seeing a “rapid” decline!
By region, on 11 month 6, prices in the northern and southern markets continued to fall across the board. Among the 28 key monitored regions, only Hainan stood out with a price increase. In many regions, the decline widened to 0.1~0.2 yuan/kg. Prices in Xinjiang and Guizhou bottomed out at 8.2 yuan/kg, while in high-price regions, Guangdong prices fell to 10.35 yuan/kg and Fujian prices also fell to 9.8 yuan/kg! Mainstream live hog prices in the northern and southern markets fell to around 8.4~8.85 yuan/kg, and the hog market entered a phase of continued bottom-seeking amid a “north-south resonance.” Losses from finishing hogs have also deepened, and pessimism is spreading across the market!
In the northern market, live hog prices in Heilongjiang, Jilin, and Liaoning have now bottomed out at around 8.45~8.6 yuan/kg. In the traditionally high-priced East China market, prices in Shandong and Anhui have fallen to 8.65~8.75 yuan, while prices in Jiangsu and Zhejiang have fallen to 8.75~8.85 yuan/kg! Regional live hog price differences are limited, and the market has entered a phase of broad stagnation.
Now, with the start of winter approaching, hog prices are falling “in full swing,” and the market continues to slide. The reasons behind the decline have been analyzed repeatedly by the author: primarily, an imbalance between supply and demand and a mismatch between production and sales.
On the supply side, hog supply is facing multiple pressures! On the one hand, actual hog supply in 11 month was ample, and the month-on-month number of planned shipments from leading and larger-scale hog producers increased further. According to an industry survey, key large-scale enterprises planned shipments of 1519.67 ten thousand head, up 2.56% month on month; the planned average daily shipment volume increased by nearly 6 percentage points, leaving supply capacity at a high level. On the other hand, as hog prices have continued to fall, producers have become less confident about holding prices firm. Pessimism is spreading across the market, willingness to sell and exit is increasing, and shipments from independent producers and some secondary-fattening operations are accelerating. Hog supply remained high this month. In particular, as of this week, the average post-slaughter weight of hogs increased by 0.37 kg to 94.65 kg, further exacerbating the oversupply of pork!
On the demand side, seasonal demand is currently entering its peak period, and consumer demand is recovering slowly as temperatures fall. The operating rate at sample slaughterhouses is 31.16%. However, with the current average wholesale price of the first three grades of pork at 12.15 yuan/kg, the price spread between live pigs and carcasses in the market has narrowed further, worsening slaughtering losses. Losses this week are expected to be around 5 yuan/head. Slaughterhouses have increased shipments of frozen pork, and the cold-storage capacity utilization rate for frozen pork has declined by 0.37 percentage points week on week. Ample supplies of frozen pork are further suppressing improvements in demand!
Based on this analysis, amid the tug-of-war between supply and demand, the live hog market remains under pressure and continues to fall. In the short term, the market may remain volatile and trend lower! For now, there are no signs that hog prices have bottomed out. The key lies in changes in demand-side capacity to absorb supply and in the sentiment of producers. Hopefully, as temperatures fall after the Start of Winter, domestic sales and urban demand for pork will improve significantly. What do you think the “floor” for hog prices will be, and will the Second Brother drop below 8.5 yuan/kg?