At the beginning of 11 month, with the Start of Winter approaching, the hog market continued its “one-way” downward trend. Currently, the quoted price for standard-weight three-way crossbred hogs has fallen to 8.86 yuan/kg. Hog prices are down nearly 20.1% from the beginning of 9 month, and the center of quoted prices has shifted significantly lower. Prices are only 0.23 yuan/kg above this year's low, putting the market at a relatively low level for the same period. The hog market is caught in a “slow bleed,” with farming losses deepening. Some independent farms that breed and raise their own hogs may be losing more than 500 yuan per head!
The hog market is currently facing multiple pressures! A near-term price recovery may be difficult to materialize. Details are as follows:
First, the piglet market remains sluggish, and producers are increasingly willing to proactively reduce capacity. Recently, more low-priced sows have been culled, increasing the supply of low-priced sows and further intensifying the market's tendency to hold hogs back from sale!
Second, the average weight of hogs shipped for slaughter has risen. Last week, the average shipping weight of sampled pig enterprises was 124.71 kilograms. The average carcass weight after slaughter also increased, raising the pork supply per market hog and further strengthening the market’s pork supply capacity!
Third, group pig enterprises have relatively high shipment plans. This month, the planned shipments of large-scale pig enterprises are 1519.67 ten thousand head. Last month, group pig enterprises completed 98.25% of their shipment plans. Some production capacity was shipped with a delay, and the average weight of hogs shipped for slaughter has risen. Supply pressure is greater this month. In particular, with 1 fewer shipping days, the average daily shipment plan is nearly 5.96% higher, leaving the hog market facing a severe oversupply situation!
Fourth, domestic frozen pork inventories are high. Last week, the cold-storage utilization rate for frozen pork was 31.6%. Frozen pork is being shipped out gradually, taking up market space for the purchase and sale of fresh pork and dampening enthusiasm for stockpiling market-weight carcasses in the downstream market. Slaughterhouse operating rates have also remained low, with little willingness to proactively increase slaughter volumes!
In addition, the peak season for pork consumption has been lackluster, and the seasonal recovery in demand has been weak. Households are increasingly substituting other products, while urban mobility has declined; demand from restaurants and dine-in customers is subdued, demand for fresh market-weight carcasses is weak, and the operating rate of sampled slaughterhouses remains low!
Based on this analysis, under the influence of multiple factors, hog prices have recently come under pressure and fallen. Seasonal changes, an increase in disease outbreaks at pig farms, financial difficulties for producers, and a rise in the number of producers voluntarily selling their stock and exiting the industry have further aggravated the high level of capacity being released. Hog prices are in a pattern where they are more likely to fall than rise!
In response to slaughterhouse price adjustments, it is expected that on 11 month 6, live hog prices will fall to 8.74 yuan/kg. Going forward, attention should be paid to changes in the pace of market buying and selling, especially changes in the pace at which producers bring hogs to market!