Zhongxin Finance, May 31 (Reporter Xie Yiguan) "The price of pork has risen during this time. I often go to the stalls where I buy meat. Compared with last month, the price of pork has risen by one or two yuan per catty." He lives in Fengtai District, Beijing Xiao Zheng said.

  This was also confirmed by a meat seller in a vegetable market in Fengtai, "This wave of pork prices has been rising for about a month."

  In March, the price of live pigs dropped to about 6 yuan per catty, and the price of pork in some supermarkets could be sold for less than 10 yuan per catty, but in the past two months, the situation has changed.

Data map.

Photo by Chen Yongnuo

Hog and pork prices rose for 9 consecutive weeks

  According to the monitoring of the Ministry of Agriculture and Rural Affairs, from May 16 to May 22, the average purchase price of live pigs in designated slaughtering enterprises of live pigs above designated size was 16.29 yuan/kg, up 2.3% month-on-month; the average ex-factory price of white strips was 21.43 yuan/kg, month-on-month. rose 2.0%.

  A reporter from China-Singapore Finance and Economics combed the data and found that the average purchase price of live pigs and the average ex-factory price of white strips have risen for 9 consecutive weeks, with a cumulative increase of 19.7% and 16.8% respectively.

  According to the monitoring of the National Agricultural Products Wholesale Market Price Information System, from May 20 to May 26, the price of pork was 20.99 yuan per kilogram, an increase of 0.8% month-on-month, and remained above 10 yuan per kilogram.

  The price increase on the acquisition and wholesale side is also reflected in the price tag on the retail side.

In a vegetable market in Fengtai District, the front and rear prices were still 13.8 yuan a pound in late April, and it had risen to 15.8 yuan a pound on May 30.

Pork section of a vegetable market in Fengtai District, Beijing.

Photo by Xie Yiguan, a reporter from China-Singapore Finance and Economics

Pig farmers breathe a sigh of relief as pig prices rise

  The rise in pork prices has also allowed farmers to "take a breather".

  Before the price of live pigs continued to be at a low point, the industry fell into a situation of "selling one head and losing one head", and small and medium-sized farmers appeared "abandoned".

After the large-scale pig breeding enterprises experienced a sharp decline in their performance in 2021, their performance in the first quarter was also "horrible".

  The leading enterprise Muyuan shares entered the "loss" camp, with a net profit loss of 5.18 billion yuan attributable to shareholders of listed companies in the first quarter; Zhengbang Technology, which ranked second in live pig production in 2021, and Wen's shares, which ranked third, were listed in the first quarter. The net profit losses of the company's shareholders were 2.433 billion yuan and 3.763 billion yuan respectively.

  Now with the rise in pig prices, the profitability of breeding has gradually recovered.

According to data released by the National Development and Reform Commission's Price Monitoring Center and Zhuochuang Information, in the fourth week of May, the national pig feed price ratio was 4.48, a month-on-month increase of 1.36%.

According to the current price and cost, the future profit of pig breeding head will be 104.10 yuan.

Tighter supply supports higher pork prices

  Although the rise in pork prices is a good thing for farmers, but it is the off-season for pork consumption recently, why did the prices rise?

  "Since July 2021, the production capacity of breeding sows has been reduced to a certain extent. The driving force for the rebound in pork prices is mainly due to the reduction in the production of live pigs caused by the reduction in the production capacity of breeding sows." Pig industry analyst Feng Yonghui told reporters.

  According to the pig breeding process, the number of breeding sows is about 10 months ahead of that of live pigs.

Data map.

Photo courtesy of Changchun Customs

  According to Ma Liyuan, an analyst at Zhuochuang Information, in terms of live pig supply, under the influence of news such as Guangdong's live pig transportation policy and frozen pork purchase and storage, the industry is more bullish on the market outlook. Pig prices rose.

  "In terms of demand, because pork prices are at the bottom, low prices have a certain stimulating effect on consumption. In addition, some slaughtering companies have the intention of dividing and entering the warehouse. The operating rate of slaughtering companies is relatively high, which has certain support for price increases." Ma Liyuan told reporters.

How long will this wave of pork price hikes last?

  "In April and May, the breeding side will focus on slaughtering and reluctant to sell. At present, the weight of live pigs is too large. As the weather turns hot, the demand for heavy-weight pigs will decrease, and some of the slaughtered pigs may be released one after another." It is hot, and the terminal demand may decrease. It is expected that the price of live pigs will fall in June.

  However, Ma Liyuan also mentioned that the market is currently in a transition from oversupply to undersupply. Although there is a risk of a fall in pig prices in June, the decline is limited, and the monthly average price is unlikely to hit a new low in March.

  "Considering that the production capacity of reproductive sows has declined since July last year, it has continued until April this year. This also means that the resulting reduction in the supply of live pigs will continue until the beginning of next year, so the price of live pigs may continue to rebound in the later period. "Feng Yonghui thinks.

Data map.

Photo by China News Agency reporter Tian Yuhao

A new round of "pig cycle" will start?

  The recent rise in pork prices has also sparked speculation about the start of a new "pig cycle".

  The so-called "pig cycle" is a cycle of cyclical pork price changes in which "high prices hurt people and low prices hurt farmers".

In layman's terms, it means "high meat prices - sow stock increased - live pig supply increased - meat prices fell - large numbers of sows eliminated - live pig supply decreased - meat prices increased".

  The co-chief economist of CITIC Securities clearly believes that from the perspective of the duration of a typical "pig cycle", this round of "pig cycle" is coming to an end.

Looking further at leading indicators such as the year-on-year growth rate of fertile sows and live pigs, a new round of "pig cycle" is brewing.

  "Combing the last two rounds of 'pig cycles', the inflection point of the year-on-year change in the number of reproductive sows is about 11 to 14 months ahead of the inflection point of pig prices. February 2021 is the inflection point when the number of reproductive sows peaked and fell year-on-year. Judging from past historical experience, there is a high probability that the end of this round of 'pig cycle' and the next round of 'pig cycle' will appear around mid-2022." Mingming pointed out.

  "A new round of pork price upward cycle will start in the third quarter." Xie Yunliang, a macro analyst at Cinda Securities, predicts that from the perspective of production capacity, there will be an inflection point at the end of the second quarter of 2021. From the perspective of profitability, the pig breeding industry It has experienced two rounds of losses; from a policy perspective, the official news is that pig prices are rising.

  On April 20, Yang Zhenhai, director of the Animal Husbandry and Veterinary Bureau of the Ministry of Agriculture and Rural Affairs, said at a press conference that our expert team predicted that with the continuous accumulation of various favorable factors such as the high number of newborn piglets and the high decline in feed costs, pig breeding in the third quarter will continue to accumulate. It is expected to turn losses into profits, but uncertainties still exist.

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