Recently, retail pork prices in wet markets in many areas have fallen as low as 10 yuan per jin, putting further downward pressure on live hog prices at the farm level. Hog farmers say they are taking heavy losses! Piglet prices, which closely track live hog prices, have become a case of no price and no market: even though asking prices continue to fall, transactions remain scarce. The entire hog industry chain has entered winter ahead of schedule.
Looking at the pork wholesale market, monitoring by the Ministry of Agriculture and Rural Affairs showed that as of 11/5 14: 00, the average pork price in agricultural wholesale markets nationwide was only 14.98 yuan/kg, down 1.3% from yesterday. Meanwhile, monitoring by the National Big Data Center for Live Pigs showed that on 11/5, the wholesale trading volume of white pork carcasses in Beijing was 57.91 ten thousand kilograms, down 0.89% from yesterday. The phenomenon of “prices falling while volumes also decline” directly reflects that the boost to end-consumer demand has been weaker than expected, and pork prices have truly failed to strengthen during the peak season!
Of course, the biggest bearish factor in the market remains ample pork supply. On the one hand, the pressure from commercial hogs coming to market as a result of earlier improvements in sow productivity is still being released, while leading hog producers are maintaining high shipment plans. On the other hand, large hogs are being shipped in concentrated volumes, and the average shipment weight of hogs has risen to a high for the year, further increasing spot supply. Combined with high frozen pork inventory levels and low prices, this is putting further pressure on fresh pork prices.
The market downturn and pessimism have continued to weigh on the piglet market. Piglet prices have now fallen to lows not seen in recent years. In some regions, the asking price for a 7-kilogram weaned piglet has dropped below one hundred yuan, far below breeding farms’ production costs. Worse still, despite the low prices, few farmers are buying piglets to replenish their stocks. There are plenty of asking prices on the market, but actual transactions are scarce. “No price, no market” is the most fitting description of the piglet market at present.
The core reason farmers are reluctant to restock is that they cannot see a path to profitability. Wen's Foodstuff Group said at a recent exchange event that the industry had previously expected that even if hog prices rebounded in the fourth quarter, prices next year would be in the range of 6.5-7 yuan per jin. The current weak market is expected to result in more thorough capacity reduction, and hog prices next year may perform better than previously expected. What is your view?