With the arrival of the Start of Winter solar term, domestic pig prices have recently been in a “dismal” state! According to data monitoring, although live hog prices briefly rose to 11.09 yuan/kg at the end of 8 and the beginning of 9, supported by the start of the school term, the market had widely expected prices to rise earlier, prompting producers to hold hogs back and increase their weight, while secondary fattening operators entered the market in waves. In addition, high summer temperatures slowed the pace of weight gain in fattening hogs! After entering 9, temperatures fell and fattening hogs gained weight more quickly. Production capacity that had previously been held back was released all at once, significantly increasing supply. However, demand failed to recover much ahead of the Mid-Autumn Festival and National Day holidays, leaving supply and demand seriously out of balance and putting downward pressure on pig prices!
In particular, after National Day, consumption continued its customary decline, while earlier production capacity proved difficult to clear. As farming losses continued to deepen, producers of various types were increasingly willing to sell, pushing pig prices further down! After entering 11, live hog prices fell below 9 yuan/kg and continued to decline, with the price of standard hogs of the three-way crossbreed touching a low of 8.52 yuan/kg! Although the market has shown signs of stabilizing and recovering over the past two days, given pressure on the supply side, pig prices still face the risk of falling again!
On the supply side, pressure to market live hogs is considerable, and production capacity is unlikely to be released all at once in the short term! On the one hand, weak piglet prices have prompted the market to accelerate the culling of low-efficiency sows. This has crowded the standard-hog market and constrained normal marketings by large-scale pig farming companies. In addition, farm operators outside the large-scale companies face losses and have a strong desire to recover funds. Independent farms are keen to sell, and some medium-to-large hogs in secondary fattening have also been sold off in succession. Live hog supply is ample, while large-scale pig farming companies have been slow to market hogs during the month. This month, planned marketings by large-scale pig farming companies have increased, and average daily market weights have risen, further reinforcing the fundamentals of oversupply! On the other hand, the recent cooler weather has increased the seasonal risk of disease at pig farms. The risks of holding hogs back have risen sharply, and the market lacks confidence in the outlook for pig prices, further spurring producers to market their hogs!
In terms of demand, seasonal demand is currently recovering slowly! Recently, supported by both the Beginning of Winter and the Cold Clothes Festival, pork buying and selling at rural markets in the domestic market strengthened, driving up slaughterhouse operating rates. The pace of fresh pork trading accelerated in many northern regions. However, as the Cold Clothes Festival comes to an end, temperatures may briefly fall after the Beginning of Winter before warming again. Temperatures in the south have risen sharply, and sales of white carcasses in consumer regions may remain sluggish. Support from pork trading may weaken, slaughterhouse operating rates face some downward pressure, and marginal support from demand may weaken!
Based on this analysis, pressure on the supply side is difficult to ease effectively, while the demand side faces a short-term risk of decline. Hog prices lack support for an effective rebound and remain at risk of weakening again. However, if marginal demand support improves and market confidence in a bullish outlook strengthens, producers may still be inclined to resist price cuts! Going forward, attention should be paid to changes in the pace of hog sales by large-scale pig companies and in slaughterhouse operating rates. Based on data monitoring and analysis of the supply-demand tussle, the national hog sale price is forecast at 8.54 yuan/kg on 11 month 12; attention should be paid to changes in the market's supply-demand pace going forward!