Recently,the live hog markethas remained in a tug-of-war near the bottom! Although the market has bullish expectations, seasonal recovery in pork demand and easing pressure on the supply outlook have given producers confidence in a higher hog-price outlook for the fourth quarter, and the live hog market has shown some resilience against declines. Unfortunately, actual feedback indicates that supply-side pressure has yet to be fully released, and capacity remains high. In addition, after the holiday, demand has provided weaker marginal support. Coupled with a sharp increase in disease pressure at pig farms in many areas and stronger cash-recovery needs among large-scale hog companies, the live hog market may continue to fluctuate downward in the short term! Hog prices are sliding, and the market may once again see a “cliff-like” decline! Details follow:
According to data monitoring, on the 10th of 12, the average ex-farm price of standard pigs from three-way crossbreeds was 10.09 yuan/kg, down 0.04 yuan. The live hog market suddenly cooled, and the market weakened again, with the price center retreating to nearly 10 yuan/kg! Market sentiment on supply and demand remains bearish. Following this decline, prices may fall “off a cliff,” and the live hog market may return to the “4-yuan era”!
According to regional feedback analysis, on 10/12, across 7 production regions nationwide from north to south, the hog market in the 28 key monitored regions maintained a pattern of “more declines than increases.” The average hog shipment price was close to the level in Hunan. In the Northeast, Northwest, and Southwest, the average price of standard-weight hogs fell below 10 yuan/kg across the board. Some quotes in North China fell below 10 yuan/ton, while mainstream quotes in the higher-priced East China and Central China regions also retreated to around 10–10.5 yuan/kg. The market showed a pattern of “declines across both north and south,” and the supply-demand fundamentals remained bearish!
In my analysis, the main factors supporting the decline in hog prices are roughly as follows:
First, the National Day holiday has ended, and the consumer market has returned to subdued conditions! Although seasonal demand has entered its peak period, supplies of substitutes are ample, and post-holiday consumption has typically weakened. Purchases and sales of white pork at rural markets in the domestic market are subdued; in cities, reduced population movement has weakened demand from group catering and dine-in services. Support from follow-through consumption is somewhat insufficient. According to data monitoring and analysis, slaughterhouse operating rates remain low, with the operating rate among sampled slaughtering enterprises retreating to around 30%. Pork demand is providing little effective support for hog prices;
Second, as the weather gradually cools during this seasonal transition, disease pressure on pig farms is rising sharply. In particular, major temperature fluctuations in many areas are increasing the risk of stress among fattening hogs. Suspected African swine fever cases have become more frequent in some southern production regions, intensifying producers’ willingness to ship hogs.
Third, large-scale pig producers are facing greater pressure to market hogs, and hog supply capacity will increase further in 10! This month, the planned hog sales volume of the sampled pig producers increased by 1.91% month over month. Sales were slow in the first ten days, while supply pressure was heavier in the middle and latter parts of the month. Moreover, after a prolonged period of losses from hog sales, large-scale pig producers are also facing considerable financial pressure. More farms are being forced to sell hogs to raise funds, further disrupting the pace of hog sales.
Fourth, the domestic price spread between fat and standard-weight hogs has narrowed, and the weight of hogs sold has increased. Supply of market-ready hogs at suitable weights has strengthened, and the share of medium- and large-sized hogs in inventory has recovered. Meanwhile, supplies of small and standard-weight piglets remain ample, limiting secondary fattening. Confidence in restocking with standard-weight piglets is weak, further dampening bullish market sentiment.
Based on this analysis, ample supply capacity and insufficient marginal support from demand are keeping supply strong and demand weak, with hog prices continuing to trend downward. At present, the market lacks clear support, and the average hog price may continue to fall; prices are likely to drop below 10 yuan/kg next. However, after briefly falling back into the “4-yuan era,” bargain hunting and resistance to selling at lower prices may strengthen, giving hog prices a basis for stabilizing and recovering. In the short term, changes in the pace of hog sales may keep the hog market within a narrow trading range, with prices likely to hover at low levels.