10 month is about to enter its middle period. The National Day holiday has ended, and hog market trading has resumed. With market sentiment weakening after the holiday, farms have resumed their shipping pace. Meanwhile, marginal demand support has weakened, tourism consumption has cooled, and the market has come under pressure and fallen! However, hog prices are currently at the bottom for this period, and underlying support remains. Key factors to watch are changes in sentiment around secondary fattening and changes in slaughterhouse operating rates. In theory, hog prices may follow a volatile but stronger trend in 10 month, but expectations of a rebound may be constrained by supply!
According to institutional data, on 10 9, the average price of standard-weight hogs was 10.13 yuan/kg, down 0.06 yuan from the previous day. Hog prices “continue to edge down,” with prices falling across markets in both the north and south, leaving the market lackluster and hog prices in a bottoming-out phase! Although corn prices near the market have fallen as autumn grain supplies have come onto the market in volume, slightly easing pressure on farming costs, large-scale hog fattening operations in China are still deeply unprofitable at this stage.
According to regional feedback, among the 7 production regions in the north and south monitored nationwide, prices could be monitored in 28 regions. Domestic hog quotations were “up in few places and down in few places.” The average hog price was close to the level of 10.15 yuan/kg in Heilongjiang. Hog prices in the north and south ranged from 9 to 11.8 yuan/kg, with prices in most areas hovering around 9.9 to 10.5 yuan/kg. In the northern market, hog prices in Heilongjiang, Jilin, and Liaoning currently ranged from 9.9 to 10.15 yuan; quotations in Shanxi and Hebei ranged from 9.95 to 10.25 yuan; and quotations in Shaanxi and Gansu in the northwest were 9.75 to 10 yuan/kg. In the southern market, quotations in Sichuan and Chongqing were 9.9 to 10.05 yuan; quotations in Shandong and Anhui were 10.35 to 10.45 yuan; quotations in Jiangsu and Zhejiang were 10.45 to 10.5 yuan; Henan quoted 10.4 yuan; and Guangdong quoted 11.6 yuan/kg!
Accordingly, on 10 9, hog prices came under pressure and fell. Most northern markets were generally weak; in the south, only isolated quotations in central China and the southwest were slightly stronger. Market sentiment was ordinary, and hog prices continued their downward momentum!
In my view, the main reason behind the decline in hog prices is the change in the supply-and-demand balance for hogs after the holiday, with the production and sales markets still facing an imbalance!
On the supply side, after the National Day holiday, farms resumed their shipping pace, with some increase in shipments from smallholders and corporate farms in both northern and southern regions! In particular, last month, many production regions fell short of their hog shipment plans, and some market-ready standard-weight hogs were deferred to 10 for shipment. Farms lack confidence in a rise in prices, and as the weather cools, hogs are gaining weight faster. The inventory of medium- and large-sized hogs in the market has improved, limiting farms’ willingness to hold back hogs and maintain prices, while hog supplies in circulation are relatively ample!
On the demand side, after the National Day holiday, although school cafeterias resumed purchasing as students returned to school, tourism consumption cooled, fewer people traveled, and the food service market weakened. Meanwhile, marginal demand from domestic households declined, adding to the pressure from consumption constraints. Major slaughterhouses faced an insufficient spread between live-hog and carcass prices, as well as relatively high frozen-product inventories. They slaughtered according to sales, and their average daily slaughter volume fell!
Based on this analysis, increased hog shipments from major farming groups after the holiday, combined with the habitual decline in demand, sent hog prices tumbling. However, with support at the market bottom, there may be limited room for further declines. After all, as the fourth quarter begins, confidence in the outlook for hog prices may gradually recover. Some market participants are still making concentrated bargain purchases for secondary fattening, while resistance to price cuts among producers may strengthen and their resolve to hold prices may recover. Seasonal consumption should also gradually improve. After a brief period of downward pressure and weakness in hog prices, the market may still have an opportunity to trend upward in the middle to latter part of the month!
According to institutional data, on 10 9, the average price of standard-weight hogs was 10.13 yuan/kg, down 0.06 yuan from the previous day. Hog prices “continue to edge down,” with prices falling across markets in both the north and south, leaving the market lackluster and hog prices in a bottoming-out phase! Although corn prices near the market have fallen as autumn grain supplies have come onto the market in volume, slightly easing pressure on farming costs, large-scale hog fattening operations in China are still deeply unprofitable at this stage.
According to regional feedback, among the 7 production regions in the north and south monitored nationwide, prices could be monitored in 28 regions. Domestic hog quotations were “up in few places and down in few places.” The average hog price was close to the level of 10.15 yuan/kg in Heilongjiang. Hog prices in the north and south ranged from 9 to 11.8 yuan/kg, with prices in most areas hovering around 9.9 to 10.5 yuan/kg. In the northern market, hog prices in Heilongjiang, Jilin, and Liaoning currently ranged from 9.9 to 10.15 yuan; quotations in Shanxi and Hebei ranged from 9.95 to 10.25 yuan; and quotations in Shaanxi and Gansu in the northwest were 9.75 to 10 yuan/kg. In the southern market, quotations in Sichuan and Chongqing were 9.9 to 10.05 yuan; quotations in Shandong and Anhui were 10.35 to 10.45 yuan; quotations in Jiangsu and Zhejiang were 10.45 to 10.5 yuan; Henan quoted 10.4 yuan; and Guangdong quoted 11.6 yuan/kg!
Accordingly, on 10 9, hog prices came under pressure and fell. Most northern markets were generally weak; in the south, only isolated quotations in central China and the southwest were slightly stronger. Market sentiment was ordinary, and hog prices continued their downward momentum!
In my view, the main reason behind the decline in hog prices is the change in the supply-and-demand balance for hogs after the holiday, with the production and sales markets still facing an imbalance!
On the supply side, after the National Day holiday, farms resumed their shipping pace, with some increase in shipments from smallholders and corporate farms in both northern and southern regions! In particular, last month, many production regions fell short of their hog shipment plans, and some market-ready standard-weight hogs were deferred to 10 for shipment. Farms lack confidence in a rise in prices, and as the weather cools, hogs are gaining weight faster. The inventory of medium- and large-sized hogs in the market has improved, limiting farms’ willingness to hold back hogs and maintain prices, while hog supplies in circulation are relatively ample!
On the demand side, after the National Day holiday, although school cafeterias resumed purchasing as students returned to school, tourism consumption cooled, fewer people traveled, and the food service market weakened. Meanwhile, marginal demand from domestic households declined, adding to the pressure from consumption constraints. Major slaughterhouses faced an insufficient spread between live-hog and carcass prices, as well as relatively high frozen-product inventories. They slaughtered according to sales, and their average daily slaughter volume fell!
Based on this analysis, increased hog shipments from major farming groups after the holiday, combined with the habitual decline in demand, sent hog prices tumbling. However, with support at the market bottom, there may be limited room for further declines. After all, as the fourth quarter begins, confidence in the outlook for hog prices may gradually recover. Some market participants are still making concentrated bargain purchases for secondary fattening, while resistance to price cuts among producers may strengthen and their resolve to hold prices may recover. Seasonal consumption should also gradually improve. After a brief period of downward pressure and weakness in hog prices, the market may still have an opportunity to trend upward in the middle to latter part of the month!