The down cycle of pig prices may be coming to an end

　　On March 30, the main contract of hog futures 2205 on the Dalian Commodity Exchange closed at 12,895 points, a decrease of 21.9% from the close of 16,510 points on October 26, 2021.

Monitoring data from the Ministry of Agriculture and Rural Affairs shows that the price of live pigs across the country has fallen for 16 consecutive weeks, with a cumulative decline of 31.7%.

　　What is the current situation of pig supply?

What is the profit and loss situation of the pig industry?

When will the falling pig price cycle end?

With these questions, the reporter interviewed relevant people in the industry.

There is still a period of excess capacity

　　"At present, the production and supply of live pigs in the country are sufficient, but the demand is shrinking, and the periodic surplus is obvious." Zhu Zengyong, a researcher at the Beijing Institute of Animal Husbandry and Veterinary Medicine of the Chinese Academy of Agricultural Sciences, told reporters.

　　From the perspective of production, according to the monitoring of the Ministry of Agriculture and Rural Affairs, in January this year, the number of live pigs sold nationwide increased by 23.6% year-on-year, in February this year, the number of live pigs to slaughter increased by 8.2% year-on-year.

By the end of 2021, there will be 449 million live pigs in the country, a year-on-year increase of 10.5%. These live pigs will be released to the market from January to June this year.

Based on this calculation, the pork market supply in the first half of the year is still at a high level.

　　From the perspective of consumption, the seasonal decline of pork consumption and the impact of the new crown pneumonia epidemic, the pork consumption after the Spring Festival is obviously weak, the production and supply of live pigs are sufficient, but the demand is shrinking, and the periodic surplus is more obvious.

From the perspective of the stock of reproductive sows, it has been declining for 8 consecutive months since July last year. However, due to the rebound in pig prices and the replenishment of gilts, the number of reproductive sows is still more than 41 million. At the same time, due to the backwardness of sows Due to the continuous elimination of production capacity, the reproductive efficiency of fertile sows has returned to the level before African swine fever.

　　Zhu Zengyong predicts that since March, the country's fertile sows may be eliminated from the stockpile, and the fertile sows will gradually drop to a reasonable production capacity range in the second quarter.

　　On March 22, the Ministry of Agriculture and Rural Affairs held a special department coordination meeting, requiring all localities to strengthen information monitoring and early warning of the entire pig industry chain, actively guide financial institutions to increase credit policy support, stabilize long-term support policies such as breeding land and environmental protection, and accurately implement live pigs. Production capacity regulation and frozen pork purchase and storage regulation, continue to do a good job in the normalized prevention and control of African swine fever, promote the stable and healthy development of live pig production, and help farm households tide over the difficulties.

Industry losses widen

　　In the early part of last week, the average wholesale price of white striped pigs in the Beijing market fell, and rebounded slightly in the later period.

"The average price dropped in the early part of last week because the number of white-striped pigs on the market increased significantly. After the wholesale price drops, the slaughterhouse will lose money, so the listing volume was compressed in the middle of last week, causing the price to rebound. The factory got rid of the loss, the listing volume has increased again, and the price has once again loosened." said Liu Tong, manager of the statistics department of Beijing Xinfadi Agricultural Products Wholesale Market.

　　Last week, the average daily listing of white striped pigs in Beijing Xinfadi was 1,670.86, an increase of 2.91% over the previous week, and an increase of 30.54% over the average of 1,280 pigs in the previous four weeks.

In the same period last year, the average daily listing volume of white striped pigs was 1,225.29, and the current average daily listing volume increased by 36.36% year-on-year.

The abundant supply of live pigs has led to low prices of white striped pigs.

On March 25, the average wholesale price of white striped pigs in Xinfadi, Beijing was 14.75 yuan/kg, an increase of 1.72% from 14.50 yuan/kg last week and a 50.83% decrease from 30.0 yuan/kg in the same period last year.

The week-on-week rose slightly and the year-on-year decline fell sharply.

　　"Because of the double squeeze of pig prices and rising production costs, the loss of breeding has increased." Zhu Zengyong said.

　　From the perspective of breeding costs, global soybean meal prices and corn prices remain high, driving up feed costs.

At present, the production costs of self-bred and self-raised piglets and purchased piglets are about 16.7 yuan/kg and 14.2 yuan/kg, respectively.

The cost of supplementing a 15kg piglet in the farm is about 300 yuan.

From the perspective of breeding efficiency, self-propagation and self-support are at a moderate loss.

At the end of March, the loss of a 120kg fat pig from self-bred piglets exceeded 500 yuan, while the loss of a 120kg fat pig from an outsourced piglet farm was close to 300 yuan.

　　However, due to the advantages of scale and technology, the production costs of leading enterprises in the industry are much lower.

Yuan Hebin, assistant to the president of Muyuan Food Co., Ltd., a leading domestic pig breeding company, told reporters that Muyuan currently has 36 million live pigs, and the current production cost is about 16 yuan/kg.

Excluding the impact of changes in external factors such as grain prices, Muyuan has set the goal of reducing costs in 2022 to achieve a full cost of 13 yuan/kg in stages.

　　Yuan Hebin revealed that in the past two years, some of the company's outstanding subsidiaries and benchmark factories have achieved excellent breeding costs in batches or stages, and achieved a relatively ideal complete cost.

These excellent breeding achievements made Muyuan see that the cost continued to drop. The plan is feasible, technically feasible, and the path is smooth.

Pig price decline gradually narrowed

　　"After June this year, the oversupply situation of commercial pigs is expected to ease, pork supply and demand will turn to a basic balance, and pig prices will rebound seasonally." Zhu Zengyong said.

　　The Ministry of Agriculture and Rural Affairs' monitoring data on bazaars and collection points in 500 counties showed that in the fourth week of March, the national average price of live pigs per kilogram was 12.52 yuan, down 0.8% month-on-month, down 54.4% year-on-year, and down 31.7% for 16 consecutive weeks. The average price of pork per kilogram was 22.38 yuan, down 1.2% month-on-month, down 49.2% year-on-year, and 22.6% cumulatively; the average price per kilogram of piglets was 23.86 yuan, down 1.2% month-on-month and 74.4% year-on-year.

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

When the price ratio of pig grain is lower than 5:1, it is regarded as entering the first-level warning range of excessive decline.

According to the monitoring by the Ministry of Agriculture and Rural Affairs, the national pig grain price ratio was 4.90:1 in February, down 0.51 points from January.

Since March, the central and local governments have fully launched pork purchase and storage, which has eased the situation of excessively rapid decline in pig prices, and the decline in pig prices has gradually narrowed.

　　Zhu Zengyong told reporters that in the short term, the price of pigs is expected to stop falling and stabilize, and the price of pigs in some areas, such as the Northeast, has rebounded slightly.

Recently, due to the prevention and control of the new crown pneumonia epidemic, roads in some areas are not smooth, and the slaughtering of live pigs in some areas has been hindered. In addition, the breeding side has suffered serious losses in slaughtering, and farmers are more willing to sell at high prices. The enthusiasm for slaughtering pigs is not high, and the difficulty of purchasing slaughtering enterprises has increased. The market waits and sees , Bullish sentiment increased.

The gradual reversal of the market supply and demand situation is expected to drive the national pig price to stop falling.

However, due to the impact on consumption, especially out-of-home consumption, it is difficult for the consumer side to support the continued rebound in pig prices, and pig prices are expected to stabilize at a low level in general.

With the improvement of the prevention and control of the new crown pneumonia epidemic, pigs will be slaughtered or concentrated in the later stage, and the price of pigs will still face certain downward pressure.

The current pig price is lower than the same period in 2019, but higher than the same period in 2018. It is expected that there will be little room for decline in the later period.

At the end of the second quarter, affected by the month-on-month decline in the supply of piglets at the beginning of the year, the oversupply of commercial pigs is expected to ease after June, the supply and demand of pork will turn to a basic balance, and the price of pigs will rebound seasonally. Up and down.

　　Since June 2003, the price fluctuation of live pigs in my country has gone through 4 complete cycles.

The durations of these 4 full cycles are 36 months, 36 months, 59 months and 49 months, and each full cycle includes a rising phase and a falling phase.

The 5th cycle that is currently running has been in an upward channel for 27 months from June 2018 to the end of August 2020, and has been in a downward channel for a total of 19 months since September 2020, with a total of 46 months. The time span is relatively close to the previous cycle.

This indicates that the decline may be coming to an end.

　　The severe winter will eventually pass, and the pig breeding industry should strengthen its confidence, accelerate the elimination of outdated production capacity, and speed up industrial upgrading to meet the arrival of a new round of rising cycle.

　　Yuan Hebin told reporters that Muyuan's key work this year is still to focus on the continuous reduction of complete production costs.

In terms of specific means, the company will further promote the coverage and application of intelligent aquaculture through various methods such as continuous management optimization, intelligent innovation and application, and personnel ability improvement, starting from the details of each production link, and reduce the difference between different subsidiaries and different factories. cost dispersion.

Reduce costs from details, seek efficiency from innovation, and improve the company's overall anti-risk and cross-cycle stable development capabilities through cost reduction.

　　Our reporter Huang Junyi