On 11 month 12, the national average price of three-way crossbred live hogs was 8.54 yuan/kg, equivalent to 4.27 yuan/jin, up 1 fen from yesterday.

 

Don't underestimate these 1 fen. As the saying goes, 1 fen can stump even a hero.

 

But what is exciting is not that hog prices rose by 1 fen, but that medium and large hogs rose in price and the price spread between standard and heavy hogs turned positive.

 

This news alone is enough to perk up the market.

 

Why?

 

Because what time is it now?

 

It’s the end of the year, just when the curing and sausage-making season is about to get underway, and demand for pigs is high.

 

Previously, the price spread between standard-weight and heavier pigs was inverted: heavier pigs sold for less than standard-weight pigs because there were too many heavier pigs. When pig prices fell and panic set in, heavier pigs were the first to be sold.

 

But now the price spread between standard-weight and heavier pigs has turned positive. The average price for heavier pigs weighing 150 to 160 kilograms is 9.46 yuan per kilogram, more than 8 jiao higher than that for standard-weight pigs.

 

So the market is quite excited. The price spread between standard-weight and heavier pigs has turned positive. Does this mean that most of the heavier pigs have already been sold? Does it mean that our “second brother” has finally recovered?

 

 

I think we should not get too excited just yet. One reason quotes for medium- and large-sized pigs have rebounded is that the curing season has begun, but this factor accounts for only a small share.

 

The main reason is that panic selling by large pig producers earlier drove prices down. Now that the acute selling has passed, there is a temporary gap in the supply of large pigs, so prices for large pigs have rebounded.

 

So the rise in prices for medium and large pigs is not driven by demand. It is mainly because they were sold off too aggressively before, and the selling is simply less aggressive now.

 

Secondly, it is still hard to say how much of a boost cured meats can provide.

 

Although year-end consumption is focused on cured meats, expectations for this market are fading under the influence of multiple factors.

 

On the one hand, under pressure from the overall macroeconomic environment in the past two years, the boost during the peak consumer season has been difficult to gauge. On the other hand, the period is relatively long, and concentrated consumption and spread-out consumption naturally have different effects on the hog market.

 

In addition, El Niño is expected to make a warm winter highly likely this year, so expectations for making cured meat are gradually declining.

 

As consumers trade down on cured meat, the boost to the hog market is naturally limited.

 

Third, there are still plenty of pigs.

 

The rise in prices for medium and large pigs is due to a temporary mismatch between supply and demand; it does not mean that there are no pigs. There are not only pigs, but still plenty of them, and the situation in which there are more pigs and even more pork has not changed.

 

Whether estimated from production capacity or from slaughter and inventory data, there will be no shortage of pigs. In addition, frozen pork inventories remain high, so supply pressure in the live pig market remains substantial.

 

Moreover, large-scale hog producers did not complete their planned marketings in 10 months, so those animals will also be added to the plans for 11 months. This means 11 months face the combined pressure of 3 factors: increased marketings for the current month, delayed marketings from the previous month, and a year-end push to boost marketings.

 

So the ceiling on hog prices is firmly constrained. There are plenty of large hogs, even more standard-sized hogs, and even more pork.

 

The rise in prices for medium and large pigs, with the price spread between standard-weight and heavier pigs turning positive, is indeed a good sign. However, it should not be taken as a turning point: there are still just as many pigs, and the market simply cannot turn around.

 

And don’t overstate the role of meat curing, either. Curing is simply a source of demand, not magic. It may support the market for a while, but it cannot prop up the entire market.

 

The current overall framework of ample supply and weak demand in the hog market has not changed, and is unlikely to change for a long time. What the hog market lacks least right now is signals; what it lacks is the patience to wait for those signals to become reality.