Pig prices still have room to rise by about 30%!? The average price of pigs slaughtered fell below 18 yuan/kg, and the key to breaking the game in July was the "second breeding"?
With the high temperature in summer, the consumption demand for live pigs has entered the off-season, and the pig prices that rose sharply in the early stage have also dropped significantly.
On June 25, the main hog futures contract 2409 fell to 17,300 yuan/ton, down more than 8% from the high point of 18,700 yuan/ton in early June.
In the spot market, according to relevant data, in recent days, the domestic pig market has been falling, the price of the north and south regions continues to show a comprehensive decline, the single-day decline is roughly 0.2-0.4 yuan / kg, the lowest price of the southwest quotation has fallen below 17 yuan / kg to 16.4-16.8 yuan / kg, the remaining vast majority of other provinces pig slaughter mainstream quotation in 17.3-18 yuan / kg, the center of gravity of pig prices across the country has dropped significantly.
Lack of follow-up on the demand side
Pig prices have fallen significantly
"The recent sentiment boost support is insufficient, the enthusiasm of the social pig source subscription has been improved, and the epidemic disease in some areas has been slightly affected, and the circulation of pig sources is relatively loose. In addition, the weak demand performance of the hot weather has hindered the upward movement of pig prices, and the enthusiasm of terminal procurement is more general, and the demand performance is weak. Under the influence of many factors, the center of gravity of pig prices has shifted downward. Wang Hailian, a pig analyst at Shanghai Ganglian Agricultural Products Division, said in the short term, the profitability of pig breeding is acceptable, and the rolling weight increase of large-scale farms is not reduced. However, the weather is gradually hot, and the time is close to the summer vacation, and it is difficult for the consumer side to show the price support point; Therefore, in the short term, the market may maintain a weak supply situation.
Li Jing, an analyst of the pig industry of Zhuochuang Information, also told the reporter of Securities Times E Company that pig prices have fallen significantly in recent days, first, because the pig source of the second fattening in the early stage was concentrated in slaughter, resulting in the recent increase in the slaughter of large pigs. Second, at the end of the month, the progress of some farms was lagging behind, and the enthusiasm for slaughter increased.
Li Jing also said that pig diseases in some areas of the south have led to an increase in short-term slaughter, and the supply side has been concentrated and increased. Affected by factors such as rising temperatures, downstream demand is weak to follow-up, slaughter enterprises are consolidating at a low level, and short-term oversupply has driven pig prices down. At present, the supply side of the pig market is concentrated and incremental, the demand side is weak to follow up, and the market is in a state of oversupply.
Although the current pig price has fallen, the breeding end is still in the profit range. According to the data of Zhuochuang Information, as of June 24, the theoretical profit value of self-farrowing pigs in China was 435.38 yuan/head, and the theoretical profit value of piglet fattening was 672.06 yuan/head.
Institutions are optimistic about the price of pigs in the future
Up to 32% upside is still expected
Although pig prices have fallen in the short term, the market is still optimistic about pig prices in the future.
Zheshang Securities pointed out that from June 2021 to April 2022, the total number of fertile sows in the country has been reduced by 8.5%, corresponding to the price of live pigs in October 2022 exceeding 27 yuan/kg, doubling compared with the bottom of the previous pig price, and from the end of 2022 to April 2024, the inventory of fertile sows has been degraded by 9.2%, corresponding to the future pig price rise or will be higher.
Coincidentally, China Post Securities said that this round of deregulation has been lower than the low point of the previous cycle, and at the same time, from December 2023 to May 2024, the number of newborn piglets in the country decreased by 7.0% year-on-year. The data of breeding and newborn piglets indicate that the number of pigs slaughtered in the second half of the year will be significantly reduced. It is expected that pig prices will rise and fall in the second half of the year, and the duration of industry profitability may exceed market expectations.
Huatai Securities believes that the high point of pig prices in this cycle may reach 23~25 yuan/kg, that is, there is still room for 22%~32% of the current pig price. From the point of view of time, as of April 2024, the breeding sow inventory has not stabilized and rebounded, and in the previous cycle, the pig price peaked and the breeding sow inventory stabilized about 4~12 months, and the pig price peaked after the self-breeding pig often still has a profit period of 5~7 quarters.
On June 25, Dawnrays disclosed the record of investor activities, and the analysis of pig price trends believes that the rise in pig prices from March to April this year is mainly affected by the reduction of production capacity caused by the northern epidemic in the fourth quarter of 2023. According to the data released by the Ministry of Agriculture and Rural Affairs, the national breeding sow inventory at the end of May was 39.96 million, a year-on-year decrease of 6.2%, "We believe that the turning point of the pig cycle has an obvious upward trend, and it is expected that pig prices will continue to be at a high level in the second half of 2024, and pig prices are still optimistic about 2025." ”
The second fattening column is still the key to solving the problem
Li Jing, an analyst of the pig market at Zhuochuang Information, believes that this round of concentrated slaughter may end in early July, the supply gap of standard pigs is still there, and there is still room for a slight decline in slaughter, and the market or supply and demand will decrease in July. The key to breaking the situation lies in the secondary fattening column, combined with the analysis of the cost of supplementing the column and the growth rate of pigs, it is expected that the amount of secondary fattening and supplementing the column promoted by this round of low prices may be less than 4-5 months. Zhuochuang Information expects that pig prices in July may fall first and then rise, and pig prices will be slightly lower than in June. However, if the southern swine disease continues to ferment, it is expected that the pig price decline and the time of decline may exceed expectations.
In July, the theoretical number of pigs slaughtered may continue to fall, and the gap in standard pigs still supports the market
According to Zhuochuang Information's estimation of the national breeding sows, large-scale farms and 6-month newborn piglet data 10 months ago, the number of live pigs slaughtered in July 2024 decreased by 0.71%, 1.99% and 1.40% month-on-month respectively. The number of live pigs slaughtered in the country and large-scale farms has fallen, which still supports the price of live pigs in July. At present, due to the concentrated slaughter of pig sources in the early stage of secondary fattening in local areas, and the centralized slaughter at the end of the month, the overall increase in the supply side has led to a continuous downward trend in pig prices under the background of continuous recovery in slaughter. Considering that the source of this batch of secondary fattening pigs is 4-5 months to fill the pigs, according to the evaluation of Zhuochuang information on the amount of this batch of secondary fattening supplements, it is expected that under the premise of centralized slaughter, the digestion time will be within 20 days, and it is expected to end before the beginning of July according to the start time. In addition, after the end of the month, the slaughter plan at the beginning of the month was reduced, the market supply declined, and the pig gap still supported the market.
Hog slaughter may show a seasonal decline, and the demand side is weak or intensifying
According to the characteristics of the seasonal trend of pig slaughter, the pig slaughter volume generally shows a seasonal downward trend from June to July. The main reason is that after entering Futian, the weather continues to be hot, which is bearish for the wholesale market. In addition, the storage cost of cold and fresh white strips has increased, and the stock volume of traders has decreased, which is bearish for the downstream market. According to the monitoring data of Zhuochuang Information, the average daily slaughter volume in June was 136,278.1 heads, down 12.06% from May, and the monthly data was second only to February in the month-on-month decline. In the past 6 months, the average decline was 11 percentage points, considering the low average gross profit of slaughtering enterprises, combined with the high cost of slaughtering the average slaughter, and the net profit has not yet gotten rid of the loss situation, it is expected that the slaughter volume in July will continue to decline with limited space, or a month-on-month decline of less than 5%.
In July, the market or supply and demand were low, and the key to breaking the situation was still in the secondary fattening column
The supply is low, the slaughter volume fell slightly, and the market may show a low supply and demand pattern in July, so the key to breaking the situation is still in the second fattening. According to the calculation data of Zhuochuang Information, as of June 20, the pig source was supplemented at the price of live pigs on the same day, fattened to 150 kg of pigs, and the slaughter cost line was 17.85 yuan/kg. Compared with the previous round of centralized supplementation cost of 16.5-17.5 yuan/kg, the cost of supplementing the column is acceptable, and after the pig source of the second fattening in the early stage is slaughtered and digested, some fattening households may still have the intention of supplementing the column. And the supply is expected to decline in August and September, the market is still bullish, and the filling behavior may still be carried out. However, considering that the temperature is high, the pig has a heat stress response, feed intake and growth rate decline, and the market supplement heat may be cooler than that in April and May, and the amount of fill in the column may be less than that in April and May.
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Source: Synthesized from Securities Times, Xinhua Finance, Beijing News, etc
Editor: Mao Hong
Note: This article is for informational purposes only and does not constitute any investment advice.