Beijing News (Reporter Wang Siyang) Since September 2020, pork prices have been declining.

According to data from the Ministry of Agriculture and Rural Affairs, as of September 18, the price of white striped pigs fell by 6.35% within the month, and the weekly average wholesale price of pork also fell for 4 consecutive weeks.

As of the week from September 17 to September 24, the weekly average wholesale price of pork fell by 2.52% from 4 weeks ago.

　　Industry experts pointed out that factors such as the stagnation and recovery of live pig production capacity, the continuous release of frozen pork from the central reserve before the holiday, and the fall in prices that caused farmers to concentrate on slaughter, all contributed to the increase in the pork market supply in September, leading to the decline in pig prices.

At the same time, although the double festival is approaching, the price increase that may have occurred before the festival has not been reflected in the general trend. In the long run, the downward trend of the pig price cycle may be coming.　　

Supply recovery causes pig prices to fall

　　Entering September 2020, the prices of live pigs and pork wholesale prices have continued to decline.

According to information from the Ministry of Agriculture and Rural Affairs, on September 18, the ex-factory price of lean white pork in 16 provinces (municipalities directly under the Central Government) was 44.38 yuan/kg, down 6.35% from 47.39 yuan/kg on September 1.

　　According to the "National Agricultural Products Wholesale Market Price Information System" of the Ministry of Agriculture and Rural Affairs, the average weekly wholesale price of pork has fallen for 4 consecutive weeks starting from the 36th week (August 28-September 3) of 2020, and ended in the 39th week (September 3). 17th-September 24th, 2020), the average weekly wholesale price of pork fell to 47.16 yuan/kg, which was 2.52% lower than the average weekly wholesale price 4 weeks ago.

　　Zhu Zengyong, an associate researcher at the Beijing Institute of Animal Husbandry and Veterinary Medicine, Chinese Academy of Agricultural Sciences, told the Beijing News that the primary reason for the current decline in pig prices is the recovery of production capacity.

According to data from the Ministry of Agriculture and Rural Affairs, in October 2019, the number of reproductive sows rose from a month-on-month period, and production capacity began to recover. In February 2020, the stock of live pigs increased from the previous month.

As of August 2020, the stock of reproductive sows has been increasing month-on-month for 11 consecutive months, with a month-on-month increase of 3.5% and a year-on-year increase of 37%; the stock of live pigs increased by 4.7% month-on-month and 31.3% year-on-year.

　　Zhu Zengyong told the Beijing News reporter that since the stock of reproductive sows has rebounded from a month-on-month basis, and based on a 10-month to 12-month production cycle, by the third quarter of 2020, the supply of live pigs should be in a stage of bottoming out and increasing month-on-month. .

In addition, the slaughter volume of designated slaughter companies above designated size has seen a slight increase from the previous month in August 2020, and the year-on-year decline has significantly narrowed.

In summary, the supply side has recovered from the bottom.

Coupled with the month-on-month increase in pig prices from June to July 2020, some farmers will be fattened for the second time, and this part of pigs will also be released for slaughter from August to September.

Pig prices did not increase significantly before the holiday

　　In addition to the steady recovery of production capacity, Zhu Zengyong said that there are three other supply factors that have also affected the decline in pig prices.

First, the current main force in the recovery of production capacity is the leading enterprises above the designated size, and the increase in the market has a greater impact on the market than ordinary retail investors.

Second, when the supply is increasing but the demand is relatively stable, the slaughter industry, which was previously at a loss, will take advantage of the change in supply and demand to lower the price of live pigs and reduce costs.

Third, the central reserve of frozen pork is continuously being put in.

　　A reporter from the Beijing News noted that as of September 29, the state had put in 35 batches of central reserve frozen pork during the year.

Among them, it has been released 5 times in September alone, totaling 8 tons.

Zhu Zengyong believes that the central reserve of frozen pork is highly competitive in terms of price and can effectively guarantee and supplement the downstream demand market.

　　In addition, the periodic decline in pig prices is also related to the concentrated selling of farmers.

Feng Yonghui, chief analyst of China Live Pig Warning Network, pointed out to the Beijing News that “the news of large-scale pig companies in the early stage of the market, such as the substantial expansion of pig companies and the gradual decline in prices, made some small and medium-sized farmers lack confidence and chose to sell their pigs before the National Day and Mid-Autumn Festival , Which has increased the concentration of live pigs in the market."

　　When the National Day and Mid-Autumn Festival are approaching, the trend of pig prices has also aroused the concern of many consumers.

In this regard, Zhu Zengyong pointed out that if the pig price rebounds, it will basically end around mid-September, but this change has not been clearly manifested under the overall trend of increasing supply from multiple sources and falling pig prices.

At present, pork stocking has basically ended, and the probability of pig prices rebounding on National Day is very small.

　　The pig price trend after the National Day will be closely related to the market supply at that time.

Zhu Zengyong said that if the supply of commercial pigs continues to increase after the National Day, and consumer demand falls after the holiday, pig prices may show a trend of volatility and decline.

And Feng Yonghui pointed out that in the process of falling prices, farmers have a large and concentrated slaughter volume. Too much release of previous production capacity may lead to a decrease in the later slaughter volume. Generally, the price of pigs should rise before the holiday and fall after the holiday, but it may also appear this year. Decline before the holiday and rise after the holiday.

The downward trend of the pig price cycle becomes a consensus

　　The decline in pig prices in September gave many consumers the hope of "gutting meat". However, when will pig prices fall back to normal levels?

In Zhu Zengyong's view, according to the current process, if there are no objective factors such as the epidemic, the production capacity of pigs should be basically restored by the end of 2021.

However, there is a certain time difference between the restoration of production capacity and the restoration of supply. It is not easy to judge the specific time when the price of pigs falls back to the normal price range.

　　Zhu Zengyong analyzed that the price of live pigs reached a historical high at the end of October 2019, and this year, affected by the epidemic, the price also reached its peak in February.

Since then, the periodical increase from June to August has not exceeded the highest prices at the end of October and mid-February last year. "The price turning point of this round of pig cycle may come."

　　However, in the opinion of Feng Yonghui, chief analyst of China Live Pig Warning Network, whether it is a turning point in pig prices still needs to be observed for another one to two months.

Feng Yonghui pointed out that if there is no accident in the midst of calculations based on the growth of breeding sows, then September to October this year will indeed be a turning point.

However, due to floods in the South this year, production capacity has been affected to a certain extent, which may affect the timing of the cyclical price turning point and the extent of price decline to a certain extent, so it is not completely certain that the turning point has arrived.

In addition, whether the current situation of capacity recovery can continue to be continued requires a comprehensive judgment based on the development of the subsequent epidemic situation.

　　Experts in the industry pointed out that although the pig price will fluctuate at a high level in the short term, the trend of long-term decline is the consensus of the majority.

Zhou Sha, an analyst at West China Securities, said in a research report that, stimulated by high profitability in breeding, breeding groups and large-scale farmers have greatly increased their enthusiasm for replenishment. The national pig production capacity has been steadily restored. The ultra-high pig price has become unsustainable, and the cycle has been downward Established and will continue until at least 2022.

　　Beijing News reporter Wang Siyang