China slaughtered 520 million hogs in the first three quarters, with 43.62 million breeding sows in stock

China slaughtered 520 million hogs in the first three quarters, with 43.62 million breeding sows in stock, and the government increased regulation to prevent the current high meat price and subsequent rapid price decline

The pig market maintained growth, inventory increased continuously from the previous month?

According to China's National Bureau of Statistics, the country sold 520.3 million pigs in the first three quarters of this year, up 5.8 %?from 491.93 million in the same period last year. Quarter by quarter, the pig market in the first quarter increased by 14.1% year on year, the second quarter increased by 2.5%, and the third quarter decreased slightly. Driven by the increase in pig production, pork production also continued to increase, with 41.5 million tons of pork produced in the first three quarters, up 5.9% year on year. With the release of early production capacity, the growth rate of pig production slowed down, the market price continued to rebound, breeding expectations are optimistic, farmers actively supplement the column, the pig inventory increased month-on-month.

At the end of the third quarter, the national pig inventory was 443.94 million, up 1.4% year-on-year and 3.1% quarter-on-quarter, representing two consecutive quarters of quarter-on-quarter growth. Among them, 43.62 million breeding sows are in the reasonable range.

Recently, the price of pigs again rose to a new high in this round of pig cycle. The price of live pigs hit a new high of 28.59 yuan/kg on Oct 20, up more than 100 %?from 13.77 yuan/kg on April 20, data showed. Especially before the National Day up to now, has?been 24 yuan/kg around the pig price for a period of time to go up again, has been approaching 29 yuan/kg at present.

What has caused the recent rise in pig prices?

Experts from the National Development and Reform Commission believe that the recent significant rise in hog prices is mainly due to the irrational behavior of excessive pressure on the market and secondary fattening, which reduce the market supply.

According to the supply and demand situation of live pigs, the supply of pigs is still relatively scarce, said Mr. Wei, a researcher at CITIC Futures. Coupled with farmers want to raise fat pigs, leading to the current relatively high price of pigs.

It should be pointed out that, in terms of price, there is a price difference between fat pigs and standard pigs at present, and this is also the reason why farmers want to raise fat pigs.

The research report of the State Investment and Investment Corporation Ansin futures pointed out that as of October 17, the average price difference of 150 kg fat pigs compared with 120 kg standard pigs reached 0.79 yuan/kg. In other words, fattening pigs can fetch a higher premium.?

"Normally, the standard weight of pigs is 110 kg to 125 kg. Now some of them are over 150 kg. That's the pressure." "Demand for fat pigs is higher in winter, leading to a price gap between standard and fat pigs," Wei said. This happens every year. In winter and spring, the price of fat pigs is higher than that of standard pigs, while in summer, the price of standard pigs is higher than that of fat pigs. This is a seasonal rule.

Zhuochuang information monitoring recently the national average profit from reproduction and self-cultivation is 1641.87 yuan/head, month-on-month increase of 119.48 yuan/head. The average profit of piglets fattening was 1566.91 yuan/head, up 118.22 yuan/head from the previous month. On the whole, the proportion of heavy pigs in the market increased, and the average weight of the national pig trade continued to rise. Zhuochuang Information monitoring recently the national average trading weight of pigs 125.37 kg, a month-on-month increase of 0.31%.

At present, the willingness of small and medium-sized farmers to expand production is not strong

Although raising pigs is profitable at the moment, there is no strong desire?among retail investors to expand. "At present, some large breeding enterprises will continue their capacity expansion plans, but small and medium-sized farmers should be more conservative," Mr Wei said.

It is understood that the current retail investors hold a wait-and-see attitude, in addition to the African swine fever factor, feed prices are also an important factor.?

Fan, a farmer in Henan, said a bag of soybean meal used to be between 230 yuan and 250 yuan, but now it is 290 yuan a bag. Another feed dealer said that the price of feed did rise a lot, the price of soybean meal is 5,700 yuan/ton, last year was 4,700-4,800 yuan/ton. In addition, the price of bran has risen considerably. He said his pig feed used to be sold to small retail investors, but in the past two years there have been fewer.?

What will be the trend of pig price in the coming period?

As for the price of pigs, experts who participated in the analysis and judgment organized by the Price Department of the National Development and Reform Commission pointed out that from the historical data, the average price of pigs in the previous "pig cycle" before 2019 was about 21 yuan per kilogram, even considering the rising cost in recent years, the current price is already at a high level.

In order to calm prices, the National Development and Reform Commission (NDRC) announced on October 19 that the country will release this year's sixth batch of central pork reserves, and guide local governments to step up efforts to release pork reserves at the same time. The announcement came just 10 days after the National Development and Reform Commission said the country would release its fifth central pork reserve this year.

On October 21, the National Development and Reform Commission (NDRC) announced that it will coordinate local governments to increase efforts to continuously release batches of pork reserves, especially for the upcoming Winter solstice, New Year's Day and next year's Spring Festival, and other important solar terms and holidays, as well as key areas where the price level is too high, such as over-stocking and over-finishing.

However, market researcher Mr. Wei believes that from the policy point of view, the release of national reserve pork on the pig price is expected to have an impact, but because the overall amount is not large, and basically frozen meat, so the real impact on the pig market is not big, more is a signal release. He also believes that the current policy is to promote farmers to speed up the market, behind another reason is that the country considers later if farmers concentrated market, will lead to a rapid decline in pig prices.

"Taking the changes in breeding sows as the core basis, since breeding sows are already on the rise and their prices are relatively high, in terms of long-term production capacity, the recovery of pig production capacity is already within reach. Therefore, pig prices in 2023 should be relatively weak compared to the fourth quarter of this year. In other words, the high price of pigs in the fourth quarter of this year is basically established. Although there is a possibility of rising in the later period, it should gradually enter a downward trend on the whole." Mr. Wei said.

In a research report, Guotou Anxin futures pointed out that the pressure to gain weight and the pre-secondary fattening behavior brought pressure on the market to supply backward. The current pig breeding is in a high profit stage, the breeding sow stock continues to rise in September, and the pig slaughter will enter a ringing stage from March to July next year, when the pig price will fall.

(Main sources: National Bureau of Statistics, 21Economy.com)