1 and the average weight of hogs marketed rise faster, with large hogs flooding the market
The average transaction weight of hogs nationwide continued to rise this week. According to monitoring by SunSirs, the average transaction weight of hogs nationwide was 126.36 kg, up 0.57% week on week. The average weight of hogs marketed was 126.64 kg, up 0.62 kg week on week, while the average purchase weight was 125.87 kg, up 0.71 kg week on week. The negative difference between the average purchase weight and the average weight of hogs marketed narrowed slightly. The average marketed weights monitored for TOP5 breeding enterprises, medium-sized breeding enterprises, and small and scattered breeders were 127.37 kg, 127.21 kg, and 126.83 kg, respectively, representing week-on-week increases of 1.01 kg, 0.37 kg, and 0.17 kg, respectively.
This week, transaction weights rose in most provinces, with only scattered areas recording slight declines. As the decline in hog prices gradually accelerated, bearish sentiment among breeders intensified. In addition, large hogs that smallholders and medium-sized farms had previously held back began to be marketed in succession. However, downstream markets were unable to absorb the supply, and sluggish sales in many areas led to involuntary holding, driving a marked increase in the average marketed weight of hogs. As temperatures fell in some areas, demand for large hogs increased slightly. Combined with the narrowing spread between heavy and standard hog prices during the week, this strengthened slaughterhouses’ willingness to purchase large hogs, and the average purchase weight rose accordingly. An analysis of average marketed weights by breeding enterprise size shows that TOP5 breeding enterprises recorded the largest increase. However, leading breeding enterprises currently have the greatest advantage in marketing their hogs, yet their average marketed weights also rose substantially. Some small and medium-sized enterprises lack a price advantage and are holding hogs back involuntarily, resulting in a clear market oversupply.
Figure 1 Trend chart comparing live pig weights
Data source: 卓创资讯
2, the gap between prices for fat pigs and standard pigs has shifted from holding steady at a high level to narrowing, with inversion in some regions
This week, the national average price gap between fat pigs and standard pigs was 0.82 yuan/kg, down 0.04 yuan/kg week on week, a decline of 4.65%. As large pigs are being marketed at an accelerated pace, some large-pig consumption areas can absorb them locally. However, in some producing regions, most large pigs come from farmers, secondary-fattening operators, or small and medium-sized farms, and lack the quarantine certificates required for interprovincial shipment, making it difficult to sell them outside the province. These areas are not local consumption areas for large pigs, leading to a rush to sell large pigs and a supply glut. The fat-to-standard pig price gap has inverted in some regions, with pigs weighing 125-160 kg particularly difficult to sell.
Figure 2: Trend of the Price Spread Between Lean and Fat Pigs
Data source: SunSirs
3, supply growth outpaced demand, and the market as a whole struggled to absorb supply
According to monitoring data from Zhuochuang Information, the daily hog sales volume of sampled farms on the 11 month 6 day was 21.72 ten thousand head, an increase of 1.43 ten thousand head from the end of 10 month, or 7.03%. The daily slaughter volume of sampled enterprises was 18.31 ten thousand head, up 0.40 ten thousand head from the end of 10 month, an increase of 2.24%. Unlike the pattern in previous months, when farms held back sales at the beginning of the month, they began accelerating sales from the start of the month, with sales enthusiasm continuing to rise. As oversupply drove hog prices down continuously, slaughterhouses' processing margins improved, leading to a slight increase in slaughter volume. However, because some processed products have not yet entered their peak consumption season, enterprises are strictly controlling frozen-product storage, leaving little room for slaughter volume to increase. Overall market consumption remains weak.
Figure 3 Trend comparison of live hog sales and slaughter volumes
Data source: Zhuochuang Information
In summary, large-scale farms are accelerating sales of standard-weight hogs, while some medium and small farms and independent farmers are stepping up sales of heavier hogs. Given the current market supply-and-demand dynamics, a stabilization in hog prices after their decline depends on an increase in demand, particularly for heavier hogs, as well as the completion of weight-reduction efforts by producers.