As 10 moves into the middle and latter part of the month, the traditional “Golden September and Silver October” period is drawing to a close in China’s hog market, and hog prices are following a “monotonic” downward trend! In particular, at the end of 8, supported by the start of the school term, secondary fattening operations entered the market. The market generally expected prices to rise ahead of the two major holidays, and sellers became more reluctant to sell. Domestic standard hog prices briefly rebounded to 11.09 yuan/kg! Unfortunately, since the beginning of 9, the hog market has been on a downward trend. In particular, on the eve of National Day, pre-holiday stockpiling demand was subdued. Meanwhile, delayed selling pressure from various market participants combined with a sharp increase in hog supply, sending prices down excessively; standard hogs fell to 9.96 yuan/kg! Although hog prices strengthened slightly at the start of the National Day holiday, as the festive atmosphere gradually faded, producers gradually resumed their normal selling pace, and hogpricesContinuing to fall sharply!
Citing data analysis by an institution, as of 10 month 16, nationwidethree-way crossbredlean-type standard hogs averaged 9.79 yuan/kg at farm gate, down 0.04 yuan from yesterday, with hog prices plunging 11.7%. Compared with the peak at the end of 8 month, prices have fallen by a cumulative 1.3 yuan/kg! The live hog market is showing a “double-bottom” pattern. Hog prices are less than 1 yuan/kg away from this year's low of 8.63 yuan/kg, and have fallen back to “pre-Liberation” levels. The depth of losses for hog farmers has widened further. So, will prices keep falling into the red through the end of 10 month? Details follow:
From a regional perspective, across the 7 key production regions monitored nationwide in the north and south, the average ex-farm price of live pigs in the 28 monitored regions was close to 9.8 yuan/kg in Hebei, Beijing, Tianjin and other areas. Live pig prices across the north and south of the country ranged from 8.95 to 11.25 yuan, with Xinjiang at the lowest and Guangdong at the highest. In most provinces and cities in the north and south, live pig prices ranged from 9.4 to 10.2 yuan/kg. The market’s center of gravity continued to shift downward. After prices in the Northeast, Northwest and Southwest fell below 10 yuan/kg, mainstream prices in North China, East China and Central China have now fallen below 10 yuan/kg. Only in some areas of Zhejiang, Shanghai, Fujian, Jiangsu, Henan, Hubei and Guangdong are live pig prices still above 10 yuan/kg. The market is seeing a sharper-than-expected decline!
For example, in the Northeast market, live pig prices in Heilongjiang, Jilin and Liaoning fell to between 9.5 and 9.55 yuan, while prices in Sichuan, Chongqing, Yunnan and Guizhou in the Southwest were 9.25 to 9.5 yuan/kg. Prices in Shandong and Anhui also fell to 9.95 yuan/kg……
This retreat in the center of gravity of pig prices has left the market continuing in a sluggish pattern. The key factor is that the supply-demand balance for live pigs is difficult to improve, and the imbalance between production and sales persists. Pig prices may briefly remain weak as they “bottom out”!
On the one hand, live pig marketings remain high! Since last month’s marketing plan was only moderately fulfilled, the marketing plans of major sample pig enterprises were 99% fulfilled. Production capacity is under lagging pressure, and the supply of commercial pigs will increase in 10 month. A survey by an industry organization found that the increase in marketing plans for the month was 1.91%, with 173 pig enterprises planning to market 1508.18 ten thousand head! The fundamentals of live pig supply are loose. In addition, ongoing losses in pig farming have strengthened farms’ willingness to recover funds through sales, and their willingness to sell is relatively high. Farms in the wider market face high fattening costs and greater financial difficulties, leading to more forced marketings.
On the other hand, pork consumption is currently entering its peak season. However, after the National Day holiday, demand briefly cooled at the margin, while domestic sales and urban demand weakened further. Meanwhile, egg prices in Linchi fell sharply, leading to more consumer substitution. Pork trading activity was weak, with downstream buyers mostly restocking cautiously. Slaughterhouse operating rates remained low, limiting their ability to take in hogs!
In addition, mainstream markets currently lack a bargain-hunting mindset. With funding constraints and disease risks increasing, and given that the farming sector expects pork supplies to remain ample, cold-storage pork inventories are relatively high. Purchases of standard-weight hogs for secondary fattening have been subdued. Although standard-weight hog prices have fallen, making restocking more cost-effective, secondary fattening operations have ended in losses after entering the market several times this year, making them even more cautious!
Based on this analysis, hog prices are under pressure and falling amid changes in supply and demand, and market fundamentals remain bearish. However, in my view, hog prices may still have a chance to stop falling and recover in the middle to latter part of 10 month. After all, with the center of hog prices moving lower, there may be limited room for further declines. As the weather turns cooler later on, demand is expected to recover and market sentiment may improve, potentially supporting hog prices!
Citing data analysis by an institution, as of 10 month 16, nationwidethree-way crossbredlean-type standard hogs averaged 9.79 yuan/kg at farm gate, down 0.04 yuan from yesterday, with hog prices plunging 11.7%. Compared with the peak at the end of 8 month, prices have fallen by a cumulative 1.3 yuan/kg! The live hog market is showing a “double-bottom” pattern. Hog prices are less than 1 yuan/kg away from this year's low of 8.63 yuan/kg, and have fallen back to “pre-Liberation” levels. The depth of losses for hog farmers has widened further. So, will prices keep falling into the red through the end of 10 month? Details follow:
From a regional perspective, across the 7 key production regions monitored nationwide in the north and south, the average ex-farm price of live pigs in the 28 monitored regions was close to 9.8 yuan/kg in Hebei, Beijing, Tianjin and other areas. Live pig prices across the north and south of the country ranged from 8.95 to 11.25 yuan, with Xinjiang at the lowest and Guangdong at the highest. In most provinces and cities in the north and south, live pig prices ranged from 9.4 to 10.2 yuan/kg. The market’s center of gravity continued to shift downward. After prices in the Northeast, Northwest and Southwest fell below 10 yuan/kg, mainstream prices in North China, East China and Central China have now fallen below 10 yuan/kg. Only in some areas of Zhejiang, Shanghai, Fujian, Jiangsu, Henan, Hubei and Guangdong are live pig prices still above 10 yuan/kg. The market is seeing a sharper-than-expected decline!
For example, in the Northeast market, live pig prices in Heilongjiang, Jilin and Liaoning fell to between 9.5 and 9.55 yuan, while prices in Sichuan, Chongqing, Yunnan and Guizhou in the Southwest were 9.25 to 9.5 yuan/kg. Prices in Shandong and Anhui also fell to 9.95 yuan/kg……
This retreat in the center of gravity of pig prices has left the market continuing in a sluggish pattern. The key factor is that the supply-demand balance for live pigs is difficult to improve, and the imbalance between production and sales persists. Pig prices may briefly remain weak as they “bottom out”!
On the one hand, live pig marketings remain high! Since last month’s marketing plan was only moderately fulfilled, the marketing plans of major sample pig enterprises were 99% fulfilled. Production capacity is under lagging pressure, and the supply of commercial pigs will increase in 10 month. A survey by an industry organization found that the increase in marketing plans for the month was 1.91%, with 173 pig enterprises planning to market 1508.18 ten thousand head! The fundamentals of live pig supply are loose. In addition, ongoing losses in pig farming have strengthened farms’ willingness to recover funds through sales, and their willingness to sell is relatively high. Farms in the wider market face high fattening costs and greater financial difficulties, leading to more forced marketings.
On the other hand, pork consumption is currently entering its peak season. However, after the National Day holiday, demand briefly cooled at the margin, while domestic sales and urban demand weakened further. Meanwhile, egg prices in Linchi fell sharply, leading to more consumer substitution. Pork trading activity was weak, with downstream buyers mostly restocking cautiously. Slaughterhouse operating rates remained low, limiting their ability to take in hogs!
In addition, mainstream markets currently lack a bargain-hunting mindset. With funding constraints and disease risks increasing, and given that the farming sector expects pork supplies to remain ample, cold-storage pork inventories are relatively high. Purchases of standard-weight hogs for secondary fattening have been subdued. Although standard-weight hog prices have fallen, making restocking more cost-effective, secondary fattening operations have ended in losses after entering the market several times this year, making them even more cautious!
Based on this analysis, hog prices are under pressure and falling amid changes in supply and demand, and market fundamentals remain bearish. However, in my view, hog prices may still have a chance to stop falling and recover in the middle to latter part of 10 month. After all, with the center of hog prices moving lower, there may be limited room for further declines. As the weather turns cooler later on, demand is expected to recover and market sentiment may improve, potentially supporting hog prices!