The number of hogs marketed rose sharply during the month, but downstream demand provided insufficient support. Involuntary holding back of hogs led to a marked increase in average weight, which continued to rise. The oversupply of heavy hogs and weak demand also narrowed the price spread between heavy and standard hogs. Slaughter volumes increased to some extent, but not as quickly as supply. A reversal in hog prices will have to wait for lower weights and increased demand.
The increase in average weight at slaughter widened, with large hogs flooding the market
The national average live hog trading weight continued to rise this week. According to monitoring by Zhuochuang Information, the national average live hog trading weight was 126.36 kilograms, up 0.57% week on week. The average weight of hogs sold was 126.64 kilograms, up 0.62 kilograms week on week, while the average purchase weight was 125.87 kilograms, up 0.71 kilograms week on week. The negative difference between the average purchase weight and the average weight of hogs sold narrowed slightly. The average weights of hogs sold by the monitored TOP5 breeding enterprises, medium-sized breeding enterprises, and small-scale and individual breeding operations were 127.37 kilograms, 127.21 kilograms, and 126.83 kilograms, respectively, increases of 1.01 kilograms, 0.37 kilograms, and 0.17 kilograms week on week, respectively.
This week, the average transaction weight rose in most provinces, with only isolated areas seeing slight declines. As the decline in hog prices gradually accelerated, producers’ bearish sentiment intensified. In addition, large hogs that had been held back earlier by smallholders and medium-sized farms began to be marketed in succession. However, downstream markets were unable to absorb the supply, and in many areas, sluggish sales led to involuntary further holding, pushing the average weight of marketed hogs up significantly. With temperatures falling in some areas, demand for large hogs increased slightly. Combined with a narrowing of the price spread between heavyweight and standard-weight hogs during the week, this strengthened slaughterhouses’ willingness to buy large hogs, and their average purchase weight rose accordingly. An analysis of average marketed weights by farm size shows that TOP5 farms recorded the largest increase. However, leading hog producers currently have the greatest advantage in marketing their hog supply, and their average marketed weights have still risen substantially. Some small and medium-sized farms lack a price advantage and are involuntarily holding hogs back, resulting in a clear oversupply in the market.
Figure 1 Comparison chart of live pig weights over time
Data source: Zhuochuang Information
The price spread between fertilizer grades, which had remained stubbornly wide, has narrowed, with inverted spreads in some regions.
This week, the national average price spread between standard pigs and fat pigs was 0.82 yuan per kilogram, down 0.04 yuan per kilogram week on week, a decrease of 4.65%. As the sale of large pigs accelerated, some large-pig sales regions were able to absorb them nearby. However, in some production regions, most large pigs came from farmers, secondary-fattening operators, or small and medium-sized farms, and lacked quarantine certificates for shipment out of the province, making out-of-province sales difficult. Since these areas were not local sales regions for large pigs, large pigs were rushed to market, resulting in oversupply. In some areas, the price spread between fat and standard pigs had already inverted; pigs weighing 125-160 kilograms in particular were severely difficult to sell.
Figure 2 Trend chart of the price spread between lean and fat hogs
Data source: Zhuochuang Information
Supply growth exceeds demand, and the market as a whole is struggling to absorb it
According to monitoring data from Zhuochuang Information, the daily hog sales volume of sampled breeding enterprises 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, up 7.03%. The daily slaughter volume of sampled enterprises was 18.31 ten thousand head, an increase of 0.40 ten thousand head from the end of 10 month, up 2.24%. Unlike the pattern of holding back hogs at the beginning of the month in previous months, the breeding sector began accelerating sales at the start of the month, with sales willingness continuing to increase. As oversupply drove hog prices lower, slaughterhouses’ processing margins improved, leading to a slight increase in slaughter volume. However, as some processed pork products have not yet entered their peak consumption season, enterprises are strictly controlling the intake of frozen products into storage. There is limited scope for slaughter volume to increase, and overall market consumption remains weak.
Figure 3: Comparative trend chart of hog marketings and slaughter volume
Data source: Zhuochuang Information
In summary, large-scale farms are accelerating the marketing of standard-weight pigs, while some small and medium-sized farms and independent farmers are speeding up the marketing of heavier pigs. Given the current pace of market supply and demand, stabilizing pig prices will depend on an increase in demand, especially demand for heavier pigs, as well as the completion of weight reduction on the farming side.