During the two holidays, hog prices instead fell below the 10 yuan mark, a situation the industry calls “a weak peak season.” In fact, demand was considerable from the beginning of 9 through the two-holiday period. From schools across the country reopening at the beginning of the month to stocking up for the two holidays later in the month, this should have been the strongest stocking period after the year-end market. However, peak-season stocking failed to lift hog prices; instead, prices broke down and fell.
Many people say demand has failed to pick up. That is certainly one factor, but the most important factor is still oversupply!
The aftereffects of the industry's frantic capacity expansion in previous years are still being felt. In addition to ample supplies of standard-weight hogs, large hogs held back for sale and hogs for secondary fattening have once again been marketed in concentrated numbers during this period. Combined with low operating rates at slaughtering companies and elevated frozen-product inventories, this has directly eliminated any room for prices to rise. This is also why, after several slight upticks, hog prices immediately fall back and hit new lows as soon as the market fervor passes.
In fact, everyone knows that hog prices cannot rise and keep hitting new lows because capacity has not yet been fully cleared; prices are unlikely to see a substantial rebound until it is.
Pork is cheap, hogs are even cheaper, piglet prices have plunged, and cull sow prices have fallen even further. Yet this situation has still not triggered large-scale production cuts. Although industry production cuts have accelerated somewhat since 8, everyone is worried that if hog prices rise and profits recover, production cuts will come to an abrupt halt and the urge to resume production will return.
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