Just after the long holiday of November, listed pig companies successively disclosed the data of pig sales in September. The prices of pigs such as Muyuan, Wen's and New Hope dropped by 6 to 7 percentage points from the previous month.

And after entering October, the downward trend of pig prices has not stopped.

　　Regarding the future trend of pig prices, there are different voices in the industry. Experts say that in the long run, although pig prices will enter a downward trend, they are unlikely to fall below 10 yuan/kg.

In the context of the accelerated expansion of various pig companies, the industry may experience a stage of overcapacity, but the excess time can be shortened through macro-control and corporate rational self-control.

The pig price is unlikely to fall below 10 yuan/kg

　　As the price of pork is falling, there have been many voices in the market that predict the price of pigs.

Among them, Tao Yishan, chairman of Tang Renshen, told the media, “The big pig farmers in the pen have long predicted that by 2022, the domestic meat price will fall to 10 yuan (per catty). I am even more pessimistic. By then, the meat price will fall to 4 yuan- 5 yuan (per catty) is completely possible.” However, at the 2020 online collective reception day for investors of listed companies in Hunan jurisdiction held on September 11, Sun Shuangsheng, secretary of the board of directors of Tang Renshen, said, “The pig price fell below 10 Remarks such as "yuan/kg" do not represent Tang Renshen's complete view of the pig industry.

　　New Hope President Zhang Minggui also said that the current general pig raising costs in the industry have exceeded 20 yuan/kg. Once the pig price drops below 20 yuan/kg, or even falls below most of the breeding cost line, it will rebound and it is impossible to continue to fall. .

　　Feng Yonghui, chief analyst of China Live Pig Warning Network, believes that the above two completely different statements should be understood in conjunction with the future development of the epidemic. If the epidemic stabilizes quickly, the price may decline. If the epidemic repeats, then the price may fall. Maintain the high position for a period of time.

　　Zhu Zengyong, an associate researcher at the Beijing Institute of Animal Husbandry and Veterinary Medicine of the Chinese Academy of Agricultural Sciences, pointed out that the pork price Tao Yishan wants to express should refer to the price of live pigs, and there is a certain difference between the price of pork that everyone buys.

Nevertheless, the argument that it has fallen to 10 yuan/kg does not conform to market laws.

According to common sense, the normal cost price of live pigs is around 15 yuan/kg. When the price continues to fall to a loss, no farmers will choose to raise more losses.

　　"However, the price of pigs is unlikely to remain above 20 yuan/kg." Zhu Zengyong said that as long as the breeding can guarantee income, farmers will expand their slaughter under the stimulation of income, but when the production capacity returns to the normal level, the price of pigs Will fall near its cost line.

"It's just that under the current background that there is no vaccine, the overall expansion speed may be affected by external shocks such as African swine fever, and the length of time for the price to fall may change."

Overcapacity is inevitable but not for long

　　Huachuang analyst Dong Guangyang pointed out in the research report that the biggest difference in this round of pig cycle is the accelerated increase in the scale of breeding. Large-scale farms have all-round advantages in terms of land, capital, provenance, disease prevention and control, and management. , The expansion speed far exceeds the industry average.

　　In fact, even if the price of pigs fell, the major pig companies have not stopped their expansion.

On September 13, Muyuan issued an announcement stating that it plans to issue convertible bonds to raise 10 billion yuan for pig breeding projects, pig slaughter projects, repayment of bank loans and supplementary working capital.

On September 14, Zhengbang Technology disclosed that 4 wholly-owned subsidiaries have invested 761 million yuan to establish 13 new subordinate aquaculture companies to expand their main business.

　　Tao Yishan also mentioned the concern of overcapacity when he was pessimistic about pig prices.

"China's major pig raising companies have announced that the scale of pig raising projects under construction or to be built will reach 2 billion heads, while China's pork consumption is only 650 million heads. In the future, the pig industry will have overcapacity."

　　In this regard, Zhu Zengyong said that any agricultural product price cycle will inevitably experience a link of overcapacity.

However, Tao Yishan's estimate of the production capacity of 2 billion heads is an overly theoretical paper data that ignores the relationship between supply and demand and market fluctuations.

In fact, pig-raising companies will formulate slaughter goals, and with the exception of a few companies, it is difficult for most companies to fully achieve their phased goals.

First, the progress of slaughter production will be adjusted by market fluctuations. Second, after my country’s live pig stock exceeds the normalized stock, the price of pigs will gradually approach the cost price, and farmers will adjust production according to market mechanisms.

　　Feng Yonghui also believes that according to the current expansion speed of large-scale enterprises, overcapacity is not impossible, and the immediate impact of overcapacity on the industry is losses and accelerated industry reshuffle.

GF Securities analyst Wang Gan and others pointed out in the research report that under the background of the gradual weakening of cycle logic, cost control will be an element of long-term competition for enterprises.

The focus of the industry will focus more on variables such as cost control and capacity growth, and the differentiation between companies will increase.

　　Zhu Zengyong told the Beijing News reporter that although overcapacity is the only way to go, through timely warning, rational farmers can adjust production arrangements in a timely manner, coupled with reasonable policies and market regulation, can shorten the maintenance time of overcapacity.

Among them, when there is an oversupply situation, large-scale enterprises will appropriately eliminate poor-performing breeding pigs to adjust the supply of upstream piglets.

In addition, although many companies are acquiring land to build sites, they will not be put into production immediately, and more are to reserve for future development strategies from the perspective of investment, and to occupy land first under favorable policies to be prepared.

　　Beijing News reporter Wang Siyang