Pig prices broke "7", the breeding end of the deep loss, the price of eliminated sows and piglets fell to the "freezing point", the bottom of the cycle has appeared

Finance Associated Press, December 9 (Reporter Liu Jian, Wang Ping'an) Recently, the national pig price fell below the 7 yuan / kg mark in a large area, and the breeding end once again entered the stage of deep loss. The reporter of the Financial Associated Press learned from multiple interviews that in the context of oversupply, the elimination of large-scale factories and retail sows is obvious, resulting in lower prices and accelerated production capacity.

"Now this pig price is not optimistic, and retail investors with lower costs are now also facing losses. A person related to the animal husbandry station in a region told reporters that the current situation of the downstream supplement is relatively deserted, and the elimination of sows is mainly concentrated in retail households and large-scale factories. "Due to the large base of sows that can reproduce, superimposed listed pig enterprises have raised "winter" funds through various means, and there is basically no production capacity clearance, or the advent of the market reversal.

The prices of culled sows and piglets continued to fall, and the sentiment of filling the fence fell to the freezing point

According to Mysteel data, the price of culled sows has continued to fall since the beginning of this year, and as of the 49th week of 2023, the average price of culled sows in the country is 8.92 yuan/kg, down 11.12% month-on-month and 50.14% year-on-year, hitting the lowest point in the same period in the past three years.

Behind the decline in the price of eliminated sows, is the passive de-production capacity under the deep loss of the breeding end, but the overall de-escalation is still dominated by retail investors and large-scale factories, a front-line person told reporters, "seasonal factors have caused the spread of epidemic disease in some areas, and the ability of retail households to prevent disease is far inferior to that of large pig enterprises, resulting in the production capacity of some retail households; ”

In the view of Zhang Bin, a pig analyst at Shanghai Ganglian, "under the background of oversupply, the breeding end has suffered serious losses, and the pressure on capital and costs is greater, especially from October to November, the number of large-scale farms and retail sow elimination has increased significantly, and the price has continued to fall." In addition, the spread of pig disease in local areas, some sows were recruited, passively eliminated, the supply increased significantly, and the price was running at a low level. This is also in line with the general trend of continuous de-production capacity. ”

The general manager of a pig information company told reporters, "Now the price of retail sows is about 4.2 yuan / catty, and the scale of the factory is about 4.9 yuan / catty. ”

As of the 49th week of 2023, the national average price of piglets is 210 yuan/head, which is significantly lower than the 284 yuan/head and 468 yuan/head in the same period in 2021 and 2022. A first-line trader told reporters.

An industry insider told reporters, "due to the continuous loss of the breeding end, resulting in poor enthusiasm for supplementing the column, the current downstream piglet transactions are limited, resulting in low prices." And at present, there are many pig diseases in winter, and the market is expected to be poor. ”

The depletion of production capacity is accelerating, has the bottom of the cycle already appeared?

Does the continuous decline in the price of sows and piglets mean that this round of pig cycle has reached the bottom? Is the long-term loss-making breeding end about to usher in the dawn? In fact, looking back at the previous round of pig cycles, the collapse in the price of culled sows is indeed often a signal at the bottom of the cycle.

According to wind data, up to now, whether it is the average price of live pigs, the price of binary sows, or the price of piglets and the year-on-year trend of fertile sows, it has fallen to the lowest point in nearly three years.

In addition, judging from the data of the Ministry of Agriculture and Rural Affairs, the sows that can reproduce have also been able to reproduce for ten consecutive months. Some industry insiders pointed out.

(Image source: wind)

Guosen Securities Research Report also pointed out that under the interference of low pig prices and breeding diseases, the production capacity of fertile sows began to accelerate. Considering that pig prices may maintain a deep loss level in the first half of 2024, the breeding groups with high asset-liability ratio and breeding costs in the industry are expected to usher in the clearing of production capacity, and it is expected that the pig cycle is expected to achieve a reversal.

However, it should also be noted that although the production capacity has been going on this year, the number of sows that can reproduce from a high base or the emergence of the bottom of the impact cycle, as of October, the national breeding sow herd is still 42.1 million, which is still 2.7% more than the normal holdings, "What we need to see is that although the production capacity is decentralized, under the premise of a high base, the production capacity is still relatively slow." In addition, sow performance has also increased significantly in recent years, so in a short period of time, we cannot arbitrarily judge that the bottom of the cycle has clearly appeared, and the duration of the cycle may be lengthened and the amplitude will be narrower. The above-mentioned industry insiders pointed out.

Zhang Bin also holds a similar opinion, "At present, the contradiction between supply and demand is still prominent, and the bottom of the price has not yet appeared." And the phased supply inflection point is still unclear, the preliminary judgment of the bottom of the cycle has not yet appeared, and the pig cycle boundary is also continuing to weaken. ”

Pig enterprises raised funds to grit their teeth to survive the cold winter, or postpone the arrival of a new cycle

Not only is the high base of fertile sows and the rise in production efficiency likely to delay the market reversal, but the listed pig enterprises that raise funds to "keep out the cold" may also further delay the de-production capacity and postpone the advent of a new cycle after successful fundraising.

According to the reporter of the Financial Associated Press, the recent New Hope (000876. SZ) announced that it plans to raise no more than 7.35 billion yuan to upgrade pig farms and repay debts, etc., and Muyuan shares (002714.SZ) also announced that it plans to apply for registration and issuance of no more than 3 billion yuan of medium-term notes and no more than 5 billion yuan of ultra-short-term financing bonds to supplement the company's working capital and repay loans. There are also second-echelon pig enterprise major shareholders to transfer shares to repay debts and support the company's production and operation.

According to public data, in 2022, 16 listed pig companies will slaughter a total of more than 129 million heads, and only the top five will have a total market share of about 15.34% of pigs slaughtered in 2022, an increase of 6.12 percentage points compared with the total market share of the top five in the industry in 2021, and the market voice is increasing.

"In fact, the current destocking of fertile sows is mainly small and medium-sized. In recent years, the weight of large pig enterprises has become higher and higher, and the ability to resist disease and risk has been continuously improved. Especially after obtaining sufficient financial support through multiple channels, the production capacity of large factories will be reduced or more distant, and the postponement of the coming of the cycle reversal is a high probability event. Some industry insiders said.

Zhang Bin also holds a similar opinion, want to judge the trend of the bottom of the cycle of large pig enterprises is particularly important, "I personally think that the bottom of the cycle appears or not is closely related to the degree of production capacity, based on the current situation, forced by the pressure of capital and cost retail investors to go more obvious, but the general trend of group enterprises is still the expansion of production increments, in addition, with the continuous improvement of the level of breeding." The decentralization of quantity does not fully represent the reduction of supply, and under the downturn of the general environment, consumption is downgraded, demand is weak, and the pattern of oversupply may persist. ”

However, no matter when the market reverses, how to survive the current "cold winter" is the key, according to historical experience, the bottom of the cycle is often the most difficult moment for the industry, and there is no shortage of pig companies falling before the dawn. Wen's shares (300498. SZ) also previously said, "Under the background of current pig prices, the breeding industry is facing greater operating pressure. If the current depressed price is maintained until the second quarter of next year, the industry may face greater financial pressure, and some companies may even have an operating crisis. ”

(Financial Associated Press reporter Liu Jian, Wang Ping'an)