In mid-11, the domestic live pig market has recently continued to search for a bottom. At the start of the month, supply pressure was high, major pig farming companies had fallen short of their planned shipments, consumer demand provided only moderate support, and many farming businesses were eager to sell, putting pork prices under pressure and causing another drop! However, after the average live pig price for the period bottomed out at 8.52 yuan/kg, there was little basis for further declines, and prices had already reached a new low in nearly 10 years. In particular, with the arrival of the Start of Winter and falling temperatures, seasonal demand is gradually improving. Demand for medium and large pigs is providing increasingly stronger support, and the live pig market is beginning to form a bottom! So, will this determined rise in pork prices deliver the seasonal turning point for an upward trend? Here is a detailed analysis:
According to data monitoring, on 11 12, the average price of live pigs for slaughter nationwide was 8.54 yuan/kg across the 7 northern and southern production areas and 28 monitored provinces and municipalities. This was up 0.01 yuan/kg from the previous day. Pork prices stopped falling and recovered, with prices moving in both directions across the market. However, the year-on-year decline remained substantial, and the domestic live pig market was still in a cyclical “trough”! In particular, prices had fallen by around 23% cumulatively compared with the start of 9.
By region, across the northern and southern markets nationwide, the average hog price at farm gate was close to 8.55 yuan/kg in Anhui. Hog prices stopped falling and rose in many areas across East China, Central China, Northwest China and North China, while scattered quotes in South China and Northeast China remained weak. In the 28 key monitored regions nationwide, hog prices were 7.65~9.8 yuan/kg, with mainstream regional prices at around 8.4~8.7 yuan/kg!
Currently, in the northern production areas, including the Northeast, North China and Northwest China markets, quotes in Heilongjiang, Jilin and Liaoning were 8.5~8.85 yuan, quotes in Shanxi and Hebei were 8.4~8.7 yuan, and quotes in Shaanxi and Gansu were 8.2~8.25 yuan. In the southern markets, including Southwest China, South China, East China and Central China, quotes in Sichuan and Chongqing were 8.1~8.4 yuan, quotes in Jiangsu and Zhejiang were 8.65~8.7 yuan, quotes in Henan were 8.5 yuan/kg, and quotes in Guangdong and Guangxi were 8.5~9.8 yuan/kg!
On 11 month 12, the domestic hog market saw prices move in both directions. However, price increases became more widespread while declines became less common, leaving the market firm overall amid a standoff. The supply-demand tussle intensified in the short term, with both supply and demand increasing!
On the demand side, seasonal pork consumption is currently entering its peak season! On the one hand, as hog prices remain persistently low, pork prices in the terminal market are also low. The average price of the top-three domestic grades of white carcass pork was around 11.85 yuan/kg, while retail pork prices in many areas were around 8~9 yuan/jin! With pork prices low, consumer willingness to buy in the domestic market has increased. In particular, beef and mutton prices nearby are relatively high, improving pork’s value for money. On the other hand, after the Start of Winter, temperatures fell sharply. Residents in northern areas have become more inclined to stock up for winter, and interest in pork consumption has strengthened. Average daily slaughter volumes at slaughterhouses have increased, operating rates are gradually recovering, and their capacity to take in hogs from the market is also gradually strengthening!
On the supply side, supplies of live pigs and pork are generally ample! On the one hand, there is pressure to market live pigs. Recently, continued losses in the breeding sector have put all types of producers at risk of running out of funds. Independent producers and corporate hog farms have a strong inclination to sell pigs and replenish their cash reserves. Second-stage fatteners who previously restocked with low-priced standard-weight pigs lack confidence in holding back medium and large pigs to support prices, and their willingness to sell is high. In particular, with the arrival of the Start of Winter and cooler weather in the north, the risk of disease at pig farms has increased, and there is a risk of panic selling by producers. On the other hand, because the sow herd base was high in the earlier period and production efficiency has increased substantially, the impact of the reduction in sow numbers has been offset. Corporate hog farms have relatively high marketing plans for 11 month. With additional sales from independent pig farms, some corporate hog farms have only generally fulfilled their monthly marketing plans, while even leading hog producers continue to increase sales!
Accordingly, amid the tug-of-war between supply and demand, the market is seeing prices alternate between rises and falls! However, as temperatures drop and pork prices remain low, follow-through in domestic demand may gradually improve. Seasonal pork demand is entering its peak season, and pork prices are expected to have little room to fall further. The market may be approaching a cyclical “turning point,” but given current pressure on the supply side, there is little chance of a significant short-term rise in pork prices! Pay close attention to changes in market buying and selling sentiment!