The pig price has not yet seen an upward turning point
Our reporter Huang Junyi
On November 9, the main contract of 2201 live pig futures on the Dalian Commodity Exchange closed at 16,155 points, a sharp increase of 18.8% from the close of 13,600 points on September 23.
Since late September, the price of live hog futures has rebounded strongly, with a large short-term increase.
What is the current pig supply situation?
What is the profit and loss situation of the pig industry?
Has the upward turning point of the pig price come?
With these questions, the reporter interviewed relevant people in the industry.
Relative oversupply of live pigs
"At present, my country's live pig production capacity continues to increase inertia, and pork supply is still abundant." Zhu Zengyong, a researcher at the Beijing Institute of Animal Husbandry and Veterinary Medicine, Chinese Academy of Agricultural Sciences, told reporters.
According to data released by the National Bureau of Statistics, in the first, second and third quarters of this year, the national pork output increased by 31.9%, 40.2% and 43.1% year-on-year respectively. The annual pork output is expected to exceed 54 million tons.
In terms of pork imports, the monthly import volume in the fourth quarter is expected to remain around 200,000 tons, and the annual pork imports may be around 3.7 million tons.
As of the end of the third quarter, there were 437.64 million pigs in the country, a year-on-year increase of 18.2%.
Among them, there were 44.59 million reproductive sows, a year-on-year increase of 16.7%.
From January to October, the total slaughter volume of designated slaughter enterprises nationwide reached 209 million heads, a year-on-year increase of 66.4%.
In October alone, 30.23 million heads were slaughtered, an increase of 111% year-on-year.
The reporter noticed a very interesting data. According to the monitoring of the Ministry of Agriculture and Rural Affairs, since July, the number of reproductive sows nationwide has declined for three consecutive months.
The stock of reproductive sows has declined, so why has the supply of live pigs increased instead of falling?
Zhu Zengyong said that the decline in the number of breeding sows was due to the increase in the number of gilts transferred to commercial pigs and the number of sows eliminated after July.
The main culprits are the ternary cross sows fed in large quantities to quickly restore production capacity after the African swine fever epidemic, and the binary sows with backward production capacity.
At present, the proportion of ternary sows in the stock of reproductive sows may have fallen to less than 10%.
Although the sow stock has declined slightly, the production efficiency has increased.
In addition, the price of binary sows was at a low level in September, and some farmers have already purchased spare sows. The production capacity of this part of sows will be gradually released in the second half of next year.
As a result, the production capacity of breeding sows will be adjusted slightly, and the supply of live pigs will continue to increase inertially, and there will still be significant pressure on pig prices in the fourth quarter.
The industry's profit and loss is basically balanced
A few days ago, Muyuan, a leading domestic pig breeding company, issued a report for the third quarter of 2021, stating that the net profit attributable to shareholders of listed companies after deducting non-recurring gains and losses dropped by 107.74% compared with the same period of the previous year.
Yuan Hebin, assistant to the president of Muyuan Co., Ltd., told reporters that during the reporting period, the company's slaughter volume of pigs increased significantly compared with the same period last year. However, the company's operating performance in the first three quarters of this year was significantly lower than that of the same period last year due to the significant decline in the market price of live pigs compared with the same period last year.
With the recent strong rebound in pig prices, the industry's profits and losses have been basically balanced.
"Since mid-to-late October, the loss of the entire industry has improved significantly. Some farmers have reached cash costs at the end of October, and the entire industry has basically achieved a breakeven at the beginning of November." Zhu Zengyong said.
The significant improvement in the loss of the entire industry was first attributed to the sharp rebound in pig prices.
Affected by factors such as a boost in pork purchasing and storage, a pick-up in consumption and a significant decline in the proportion of big pigs, pig prices began to rebound significantly in the second week of October. In early November, self-breeding and self-raising basically broke even, and outsourced piglet farmers made a small profit per pig Around 50 yuan.
At present, the cost of self-reproduction and self-support is generally around 16 yuan/kg, which has made a slight profit, but some farmers whose costs are higher than 17 yuan/kg are still at a loss.
The second is to benefit from the reduction in the cost of pig breeding.
By the end of October, the cost of outsourced piglet farmers dropped from 29 yuan/kg in January to around 17 yuan/kg, starting to be lower than that of self-breeding and self-raising farmers.
The piglets purchased in September will be released for slaughter in February next year, and the cost is expected to be around 12 yuan/kg. The average cost of self-reproduction and self-raising has also dropped to about 15 yuan/kg.
With the reduction of breeding costs, it is expected that the loss caused by the fall of pig prices in the later period will not be as large as in early October.
Pig prices may fall again
Does a sharp rebound in pig prices mean that an upward turning point is coming?
Kong Liang, head of the Animal Husbandry and Veterinary Bureau of the Ministry of Agriculture and Rural Affairs, told reporters that the supply of live pigs in the market "looks at piglets in the medium term, and sows in the long term."
Since March, the number of new piglets per month on the national scale pig farms has been more than 30 million, and it has continued to grow.
From August to September, the national stock of reproductive sows was close to 110% of the normal stock.
It is expected that the number of fat pigs listed in the fourth quarter of this year to the first quarter of next year will increase significantly year-on-year, and the relative oversupply of live pigs will continue for some time. If the production capacity is not substantially reduced, the downturn in pig prices will be difficult to reverse.
Especially in the off-season after the Spring Festival next year, pig prices may continue to fall and cause heavy losses in pig breeding.
Zhu Zengyong said that since June 2003, the price of live pigs in my country has gone through four complete cycles, and each cycle lasts for several years. It is too early to talk about the rising cycle.
The main reasons for the rebound of pig prices since mid-October are: first, pig prices fell to a low level after the National Day, and some areas fell below 10 yuan/kg. Under the market mechanism, pig prices have a certain rebound demand; second, they closed on October 10. 30,000 tons of central reserve meat was stored, and at the same time, local frozen pork storage and storage were also started in many places, which significantly boosted market expectations and pig prices; third, lower pig prices stimulated consumption recovery and home food reserves; 4. Affected by the accelerated increase in the price of pigs, the breeding end is bullish and reluctant to sell, and the enthusiasm for slaughter of live pigs has declined, which has led to a tightening of market supply in a short period of time.
Zhu Zengyong estimates that from the fourth quarter of this year to the first half of next year, the national pig price is generally at a low level, and there may be a significant risk of a fall in the later period.
In the short term, the significant rebound in pig prices after the National Day is mainly supported by the significant decline in the proportion of large pig stocks and the boost in consumption.
After the Chinese New Year in 2022, consumption will decrease seasonally, and the price of pigs may drop significantly again.
According to the experience of the previous cycle, the market low point will be 20% to 30% lower than the cost line. If the industry cost drops to about 15 yuan/kg, the market low point may be 11 yuan/kg to 12 yuan/kg.
After the outbreak of African swine fever, in order to restore production capacity as soon as possible, a large number of new pig farms have been newly expanded in various places under the support of policy and the promotion of breeding benefits.
In the first three quarters of 2020, there were 62,000 newly registered pig-raising companies nationwide, a year-on-year increase of 127.3%.
Some aquaculture companies have expanded rapidly through new expansion, development of a large number of contract farmers, leased farms, trusteeship, etc., and the cost of aquaculture is much higher than the industry average.
Since the beginning of this year, the price of pigs has continued to fall, and some companies even have monthly losses of more than hundreds of millions of yuan.
After the increase in losses at the end of the third quarter of this year, the phenomenon of unfinished pig farms under construction in some areas increased.
In order to reduce the market risk in the later stage, protect the interests of farmers, and ensure the stable adjustment of pig production capacity, Zhu Zengyong suggested that farmers should do the following three aspects: First, speed up the elimination of low-yielding sows, optimize the structure of breeding sows, and appropriately reduce the scale of stocks. Buy high-reproduction reserve breeding pigs at low prices, optimize the gestational age structure of sows, improve the efficiency of breeding pigs, ensure high-efficiency sow productivity, take advantage of the trend to produce pigs for slaughter, and avoid slaughter and speculative secondary fattening; the second is through refined management, Improve the feed conversion rate and reduce the cost of breeding; the third is to do a good job in the prevention and control of major animal diseases and the management of breeding liquid funds.