Source: China Feed Industry Information Network
Approaching the May Day short holiday, the domestic pig supply and demand structure weakens in a short period of time. Although there is a demand for stock in the market, the consumption profit has not yet been realized. Since last week, the pig spot market is facing periodic pressure, market sentiment is weak, pig prices have fallen steadily. Pig futures showed a volatile downward trend, the main contract 2409 fell to a nearly one-month low in intraday trading on Friday.
Since the middle of April, the domestic pig stock has shown a phased growth trend. Bi Hui, a senior agricultural product researcher at Baocheng Futures, said that on the one hand, the stock of the group factory has improved steadily; on the other hand, the two large-weight pigs that entered the market at the beginning of 2024 have been listed one after another. relevant data show that the current market weight is about 123 kilograms, and the proportion of medium and large pigs has increased.
"in addition, from the perspective of the second breeding market, there is not much second breeding at this stage, mainly because with the rising cost of the second breeding, the second breeding reappears the loss, which limits the enthusiasm of the second breeding, which leads to the phased supply pressure in the pig market." Bi Hui said that there was a demand for stock in the market before the May Day short holiday, but it was difficult for the actual demand to undertake a huge increase in supply, and the periodic oversupply put pressure on pig prices as a whole.
Wei Xiu, an analyst of live pigs and eggs in Huizhou Merchants Futures, said that recently, small and medium-sized farmers in many places in China have good expectations for the consumption of the May Day short holiday, and there is a certain reluctance to sell, which supports pig prices. However, the performance of terminal demand is relatively weak, which significantly suppresses the sharp rise in prices.
Talking about whether this year's May Day short holiday will usher in a small consumption peak, Bi Hui believes that stock has been started recently before the short holiday, but the demand for live pigs is still weak, specifically as follows: the wholesale volume of white strips in many wholesale markets is on the low side compared with the same period last year, and residents' willingness to spend has not been greatly boosted. At the same time, the storage rate of frozen goods in the industry continues to decline, and under the background that the inventory of frozen goods is still high and more funds are occupied by butcher enterprises, the initiative of slaughtering end is not high. However, as losses have intensified, the willingness of slaughtering companies to cut prices to collect pigs has increased. In addition, from the seasonal performance of the market, short-term holiday demand is actually difficult to change the pattern of depressed pork demand, and the boost to pig prices is limited.
However, Wei Xiu told reporters that at present, the number of live pig slaughtering across the country shows a concussive upward trend. Approaching the May Day holiday, some areas have been boosted by festivals, with signs of acceleration in pork distribution and an increase in carcass. Among them, the market supply level in the northern provinces is on the high side, and the price performance is weak, but it is expected that the supply level at the end of the month will be difficult to maintain the previous peak level. At the same time, the market still has stock expectations before short holiday, and pig prices are expected to be supported by market sentiment and fundamentals this week. Overall stability is on the strong side.
Although the short-term supply and demand pattern of live pigs is not enough to drive up pig prices, in the medium to long term, analysts believe that with the release of inventory pressure, pig supply will show a downward trend.
The stock of fertile sows has declined in the first quarter of this year. The pig product data of the first quarter of 2024 jointly released by the Ministry of Agriculture and Village, the National Development and Reform Commission, the Ministry of Commerce, the General Administration of Customs and the National Bureau of Statistics showed that 39.92 million sows could be reproduced at the end of the first quarter of 2024, down 3% from the previous month.Onlinegamingcrypto.6%, down 7.3% from the same period last year; 408.5 million live pigs, down 5.9% from the previous month, down 5.2% from the same period last year; 194.55 million live pigs, down 2.2% from the same period last year; and pork output was 15.83 million tons, down 0.4% from the same period last year.
So, has the supply of live pigs reached an inflection point?Onlinegamingcrypto? Bi Hui believes that according to the time when the epidemic appeared from October to December last year, the pig market is expected to usher in a phased tightening of supply in the third quarter of this year. Although after the elimination of production capacity, the withdrawal proportion of bulk farmers has exceeded 40%, but the reserve conversion efficiency of domestic group factories has improved, and the number of pigs produced by head pig enterprises in 2024 is expected to maintain an increase of more than 15%. In the follow-up, as the production capacity of the group continues to expand, the speed of capacity removal in the industry will significantly slow down. In addition, according to the self-breeding profit level, the current industry has achieved 11 consecutive weeks of profits, and profit expectations continue to improve, in the context of pig farming profits are expected to continue to improve, the speed of free-range farmers to continue to slow down. In the long run, after the phased tightening of supply in the second half of 2024, there may be some setbacks in supply in January 2025, and the process of eliminating pig capacity will slow down as a whole.
"from the perspective of medium-term fundamentals, the situation of oversupply in the pig industry chain is still difficult to reverse quickly, but consumption is more likely to improve in the second quarter than in the second quarter, and linear extrapolation will be made in the next 10 months according to the changes in the ratio of breeding sows to the next 10 months. live pigs are expected to peak and fall in April. The decline of piglet fencing in the third quarter of last year to a certain extent may greatly ease the pressure of fencing around July this year. " Founder mid-term futures feed breeding research center researcher Song Congzhi said.
Looking forward to the future, Bi Hui said that it is unlikely that pig prices will be "not light in the off-season" as they did last year. Although the number of live pigs will enter a seasonal downward trend after May, there are still a large number of frozen goods inventory waiting to be released from the warehouse, and the decline in consumption will be more obvious, especially in the context of overall weak consumption this year. The characteristics of the consumption off-season may be more obvious.
Wei Xiu also said that from previous years' experience, there will be a short-term decline in pork consumption after the festival. It is expected that after the consumption lands, the pig price may have the risk of going down due to the restriction of the actual terminal demand. It is suggested that we should continue to pay attention to the sell-off caused by the rainy season in the south and the clearing of hurdle capacity in the north.
Generally speaking, Bi Hui believes that as the temperature continues to rise, the price gap of pig fertilizer continues to narrow, and the enthusiasm of the second breeding column is increased. April-May ushered in the peak of pig production, the number of pigs in some areas increased by more than 20%, superimposed low-price frozen pork into the market, phased supply pressure significantly increased. Consumption continues to be in the doldrums, white bar sales are slow, the operating rate of butcher enterprises remains low, and the willingness to close pigs at low prices is strong. However, taking into account the short-term ushered in short-term holiday stock demand, while some southern provinces affected by heavy rainfall, the breeding end has a certain price sentiment, the spot price of wool pigs is relatively resistant.
Looking forward to the follow-up pig noodles, Bi Hui said that it is expected that pig prices may be affected by the spot market, the decline will slow down.
"We believe that the current overall valuation of pig futures prices has been repaired upwards. The absolute price of the far-month contract is already higher than the full breeding cost. With the strong piglet price and the gradual improvement of pork demand, it is expected that the far-month contract futures prices will continue to fluctuate. Rising trend." Song Congzhi said.
Sources: Futures Daily, China Animal Husbandry