The middle of 11 month is approaching, with the Start of Winter arriving and the Cold衣 Festival drawing near. Seasonal factors have led to a slight improvement in pork demand in recent days. In addition, as cold air becomes more frequent, many areas of North China are expected to see their first snowfall since autumn began this year, and domestic pork consumption is also expected to recover gradually. However, feedback from the market indicates that although consumption has improved at the margin, the support is relatively limited. In particular, the operating rate at sampled slaughterhouses is currently 31.28%, so the increase in demand is extremely limited!
The reasons holding back an increase in slaughterhouse operating rates are as follows. First, terminal prices for chilled pork carcasses continue to fall. Although live hog prices are adjusting downward slightly, major slaughterhouses are struggling to make a profit. Sampled slaughterhouses are still mainly operating to fulfill orders, with little initiative to increase operating rates. Second, major slaughterhouses have high frozen pork inventories. This week, the storage capacity utilization rate for frozen pork was 31.23%, and shipments of frozen pork increased, taking up supply-and-demand space for fresh chilled pork! In addition, the average weight of hogs shipped for slaughter rose by 0.51 kilograms this week, and average slaughter weight increased by 0.37 kilograms. This further strengthened pork supply and held back an increase in slaughterhouse operating rates!
At present, the improvement in demand at the margin is limited, while pressure from excess supply remains high! In particular, this month, planned shipments by large-scale pig farming companies stand at 1519.67 ten thousand head, up 2.56% from actual shipments last month. Moreover, with fewer shipping days, the planned average daily shipments for 11 month have increased further, creating a considerable risk of selling pressure in the hog market!
Moreover, as cold air activity increases, fattening pigs face sharply rising disease pressure, and the risk of farms holding back hogs for sale intensifies. Market sentiment generally remains inclined to sell. Independent producers, large-scale hog companies, and secondary-fattening operators are competing to ship hogs, putting pressure on both standard-weight and medium-to-large hogs and further intensifying downward pressure on the market!
Accordingly, amid an imbalance between supply and demand, hog prices have recently continued to shift lower. The national average price for standard-weight hogs has fallen below the second-quarter low of 8.63 yuan/kg. Market sentiment remains weak, with strong expectations of either further declines or stability. In the short term, the market may remain weak as it searches for a bottom, and hog prices may gradually approach the level of 8 yuan/kg!
According to monitoring by an institution, following price adjustments by slaughterhouses, on 11 month 8 day, the national average ex-farm price for live hogs of the three-way crossbreed was 8.55 yuan/kg, down 0.06 yuan. Going forward, attention will focus on changes in the pace of market supply and demand!
Overview of hog prices across provinces and regions in northern and southern China (for industry reference only)