How does purchasing and storage affect the trend of pig prices?

　　Our reporter Huang Junyi

　　On July 7, the Ministry of Commerce, the National Development and Reform Commission, the Ministry of Finance and other relevant departments launched the first batch of central pork reserves for 2021, with a total of 20,000 tons.

　　Why does the state temporarily purchase and store pork?

How will purchasing and storage affect the trend of pig prices?

　　Play the role of pork reserve regulation

　　Since the beginning of this year, domestic pork prices have fallen for 22 consecutive weeks, and the industry has suffered serious losses.

The temporary pork reserve purchase and storage was initiated on the basis of excessive price declines.

How to judge the excessive drop in pig prices?

We must first understand a concept: pig-to-food ratio.

The pig-to-food ratio is the ratio of the price of live pigs to the price of corn used as feed.

　　The price ratio of pig food is the ratio of the weekly price of live pigs monitored by the National Development and Reform Commission to the average wholesale price of second-class corn in major wholesale markets across the country.

According to the calculation of production cost data in recent years, the ratio of pig food corresponding to the break-even point of live pig production is about 7:1.

　　According to the early warning mechanism set by the National Development and Reform Commission, when the pig-to-food price ratio is lower than 6:1, a three-level warning will be issued; when the pig-to-food price ratio is between 5:1 and 6:1 for 3 consecutive weeks, or the stock of sows can be reproduced When a single month’s year-on-year decline reaches 5%, or the number of reproductive sows has decreased by 5% to 10% for three consecutive months, a second-level warning will be issued; when the price ratio of pigs to food is lower than 5:1, the stock of reproductive sows may be A first-level warning will be issued when the volume of a single month has decreased by 10% year-on-year, or the number of breeding sows has decreased by more than 10% for three consecutive months.

　　The National Development and Reform Commission, the Ministry of Finance, the Ministry of Agriculture and Rural Affairs, the Ministry of Commerce, and the State Administration for Market Regulation issued on June 2 this year the "Improving the Government's Pork Reserve Regulation Mechanism and Doing a Good Job in the Pork Market to Guarantee Supply and Stabilize Prices" (hereinafter referred to as the "Work Plan" 》) Regulations: At the national level, temporary reserve purchases and storages will not be activated when the third-level warning of excessive decline is issued; the temporary reserve purchases and storages will be initiated when the second-level warning is issued; and when the first-level warning is issued.

The conditions for the purchase and storage of temporary reserves at the local level shall be implemented in accordance with the practice at the national level.

　　When the national level issues a first-level warning of excessive fall in live pig prices, the central and local governments will fully start purchasing and storage.

　　According to the monitoring of the National Development and Reform Commission, from June 21 to June 25, the national average pig-to-food ratio was 4.90:1.

According to the provisions of the "Work Plan", it has entered the first-level warning range of excessive decline below 5:1.

　　Significant effects of previous purchases and storage

　　Regarding the impact of this purchase and storage on the price of pigs, you may wish to refer to the performance of past purchases and storage.

　　"The effect of policy regulation varies greatly from year to year," said Zhu Zengyong, a researcher at the Beijing Institute of Animal Husbandry and Veterinary Medicine, Chinese Academy of Agricultural Sciences.

　　Since my country’s first control plan was launched in June 2009, except for the record high pig price in 2011, which was not implemented, the recorded national pork purchases and storages are as follows: 120,000 tons of frozen meat were purchased and stored on June 5, 2009; Five batches of frozen meat totaling 170,000 tons; in 2012, about 100,000 tons of frozen pork were collected and stored twice; in 2013, 168,700 tons of frozen pork were collected and stored twice; in 2014, a total of 153,000 tons of frozen pork was purchased and stored; 2019 After the African Swine Fever in the year, the purchase and storage were implemented twice.

Each purchase and storage occurs after the pig-to-grain ratio falls below the equilibrium point, and the size of the purchase and storage is often 0.1% to 0.3% of the total consumption.

　　On June 5, 2009, the National Development and Reform Commission announced the start of frozen pork storage and storage.

Before the acquisition, the price of pig food had been below the 6:1 break-even warning point for 4 consecutive weeks, and the price of live pigs hit the lowest point since November 2006.

After purchasing and storing, it effectively reversed the excessive decline in pig prices.

According to the data of 480 bazaar monitoring points of the former Ministry of Agriculture, the price of live pigs stopped falling and stabilized in the second week of June 2009, and rebounded for 15 consecutive weeks starting from the third week.

　　In 2010, compared with the previous year, the frozen pork collection and storage work started 2 months ahead of schedule.

After the purchase and storage, the pig price began to fluctuate at a low level for 2 months in mid-April, and it began to continue to rise after mid-June.

　　In May 2012, the state launched a control plan to ease the cyclical fluctuations in the price of the live pig market, but it was not until the second purchase and storage of pig prices was implemented three months later that the price of pigs began to rise.

　　In mid-April 2013, the country started purchasing and storing after the price ratio of pigs and grain was lower than 6:1 for 6 consecutive weeks. However, the price of live pigs did not stabilize until the second purchase and storage in early May, and the price of pigs rose for 18 consecutive weeks from the third week of May.

　　The country started purchasing and storage at the end of March 2014. The price of live pigs slowed down in the first week of April and stabilized at the end of April. After the second purchase and storage in early May, the price of pigs rebounded rapidly.

　　When the second purchasing and storage started in 2019, the price of pigs rebounded significantly.

　　Therefore, it remains to be seen how the pig price will go after the first batch of central reserve pork purchases and storage starts in 2021.

　　Promote the smooth operation of pig prices

　　Monitoring data from the Ministry of Agriculture and Rural Affairs showed that as of 14:00 on July 7, the average price of pork in the national agricultural product wholesale market was 22.43 yuan/kg, which was basically the same as the previous trading day.

　　"Although frozen pork purchasing and storage cannot fundamentally change supply and demand, it still has a significant market boost in the short term." Zhu Zengyong said.

　　After the Spring Festival of 2021, the price of pigs has fallen for 22 consecutive weeks, and the price of pigs and food once fell below 5:1.

After the pig food ratio fell below 6:1, the National Development and Reform Commission successively issued three-level, two-level and first-level early warning information to guide farmers to moderately adjust the production capacity of pigs and reduce the phenomenon of speculative secondary fattening, especially Effectively guide the early slaughter big pigs to be slaughtered in time, slowing down the phased oversupply.

With the release of the first-level warning information, the market confidence of the breeding entities has increased significantly. Since June 23, the national pig price has quickly stopped falling and rebounded, and the price of live pigs in many places has risen above the cost line.

　　Liu Tong, manager of the Statistics Department of Beijing Xinfadi Agricultural Products Wholesale Market, told reporters that the average wholesale price of white striped pigs from Xinfadi last week was 19.75 yuan/kg, an increase of 19.70% from last week.

　　"After a period of digestion, the proportion of super-large white striped pigs in the market has dropped significantly, creating conditions for meat prices to stop falling and stabilize." Liu Tong believes that purchasing and storage has strengthened the confidence of farms and slaughterhouses.

So far, pork prices have basically climbed out of the bottom.

　　Zhu Zengyong said that market regulation does not mean reducing support policies.

Scientific and reasonable government control policies will promote pig production and stable pig prices.

Developed countries have established a package of live pig market control mechanisms, and the government has comprehensively applied multiple policies to boost the market in the short term, prevent risks, and ensure stable production in the long term.

For example, the US Department of Agriculture provides farmers with risk protection, loan subsidies, and timely purchase and storage of pork.

Japan has established a production stabilization fund and implemented various policies such as insurance, import benchmark prices, and pork purchasing and storage.

Through continuous optimization of my country's frozen pork purchasing and storage policies, combined with other regulatory policies, it will be able to effectively regulate the live pig market and promote the stable operation of pig prices.

　　Regarding the market trend in the later period, Zhu Zengyong believes that although the pig price has rebounded greatly recently and there is still a fall adjustment, the possibility of falling to the previous low is relatively small, and the seasonal shock may rebound in the later period.