At the beginning of 11, the live pig market continued to come under pressure. Demand remained sluggish, and the seasonal recovery in demand was limited. However, supply-side pressure was released all at once. With supply strong and demand weak, domestic pig prices suffered a sharp blow and continued to trend downward. Currently, the quoted price for standard-weight pigs has fallen to 8.74 yuan/kg, down 14.7% from the beginning of 10. Pig prices are close to this year's lowest level, highlighting a pattern in which the peak season has failed to bring a peak in demand!
This unexpectedly sharp drop in pig prices is mainly due to the ongoing mismatch between supply and demand and the imbalance between production and sales, which have fueled panic among producers. In particular, pig fattening has incurred losses for an extended period this year. Moreover, despite the arrival of the peak consumption season, producers' losses have continued to deepen. At present, mainstream self-bred and self-raised standard-weight pigs are being sold at an average loss of nearly 340 yuan per head! Mainstream pig companies are facing a sharp increase in financing costs and a stronger need to recover funds. Recently, producers have shown a clear trend of capacity reduction. Market-ready large pigs and standard-weight pigs are being actively shipped, while many standard-weight pigs placed in secondary fattening earlier are being sold at a loss. This has further aggravated the oversupply on the supply side!
In addition, among large-scale pig companies, some capacity has been shipped later than planned because shipment plans were not adequately fulfilled last month. This month, major pig companies plan to ship 1519.67 ten thousand pigs, an increase of nearly 2.6% month on month. As for shipment weight, the average weight of pigs shipped this week rose to 125.22 kg, up 0.51 kg from the previous week. The market's growing share of medium and large pigs in inventory, together with a lack of confidence in a future price rise, has intensified the willingness to sell. In particular, the increase in shipment weight is also increasing the market's supply of pork. The amount of pork supplied per pig has risen, further aggravating the market oversupply!
On the demand side, pork consumption has remained lackluster. Although demand has improved compared with after the National Day holiday, the operating rate at sampled slaughterhouses has been slow to rise. In particular, frozen pork has been shipped out successively, increasing the supply of frozen pork products. This has also constrained slaughterhouse operating levels, and demand has limited capacity to absorb hog supplies overall!
Therefore, due to the market’s supply-demand imbalance, hog prices have fallen in the short term, and the price center may continue to move lower! According to data monitoring, with slaughterhouses pressing down prices, the quoted price for standard pigs of the three-way crossbreed is expected to be 8.61 yuan/kg on 11 month 7. Going forward, attention should be paid to changes in the pace of market buying and selling, especially changes in shipments by large-scale hog producers and in slaughterhouse operating rates!
In my opinion, after entering the middle and latter part of the month, as temperatures fall further, residents’ demand for winter provisions will improve, and the southern regions’ curing season will begin. The live hog market may gradually improve, and hog prices may enter a channel of seasonal increases!