The recent rapid rise in pig prices has drawn attention from all walks of life.
On July 4, the main 09 contract of hog futures exceeded 22,000 yuan / ton, and the period was strongly closed.
It closed up 7.71% at 22,695 yuan / ton.
This is also a new high in nearly a year since it first stood on the 20,000 mark on June 27.
The industry believes that with the rapid profitability of pig breeding, from the pig price in early July, the breeding efficiency has reached a moderate level of profitability, and the operating conditions of pig enterprises have improved significantly.
However, since pig enterprises are quite common in debt management, achieving profitability in the short term does not mean that the problem of financial constraints has been completely solved, and enterprises still need to manage cash flow carefully.
Pig prices rebounded quickly in a short period of time
According to the monitoring of the Ministry of Agriculture and Rural Affairs, as of 14:00 on July 4, the average price of pork in the national agricultural wholesale market was 25.74 yuan/kg, up 4.8% from last Friday.
Since mid-to-late June, the price of pigs has risen sharply.
According to data from the China Pig Network Pig Data Center, on July 4, the price of live pigs in Waisanyuan was 21.48 yuan per kilogram, an increase of more than 70% from the low point in March.
Regarding the recent rapid rise in pig prices, some analysts also pointed out that as the price of live pigs has continued to rise since April, farmers have a strong bullish sentiment, they are reluctant to sell, the supply of live pigs is short-term tight, and widespread rainfall across the country has affected the production of live pigs.
Regarding the reluctance to sell live pigs, there are different considerations for large-scale breeding enterprises and small retail investors.
Xu Hongzhi, a senior researcher at Brick Consulting, told the First Financial Reporter that from the sales data of large-scale enterprises, the situation of reluctance to sell is not obvious, because under the influence of financial pressure, enterprises urgently need to withdraw funds.
However, for small and medium-sized retail investors, because of their small scale, flexible transformation, and convenient capital turnover, they have the motivation and ability to push the bar.
He believes that although the current increase in pig prices is fierce, it is only returning the industry to a relatively reasonable profit margin.
The rise in pig prices has also attracted intensive research by investment institutions on leading pig companies.
On June 16, Muyuan Co., Ltd. mentioned in the investor relations activity record sheet that the increase in pig prices this time was mainly due to the marginal improvement of the supply and demand relationship rather than driven by pure emotions or short-term expectations.
The company agrees with the market's judgment on the price of pigs in the second half of this year. It is expected that the price of pigs in the second half of this year will reach RMB 18/kg to RMB 20/kg.
From June 22nd to 24th, Wen's shares stated in the conference call exchange activity (online) that pig prices started a new round of rising cycle in March this year, but this year's "pig cycle" completely reversed, directly entering a unilateral rise. The possibility of the cycle is small, and it still needs time to verify.
It is expected that the overall price of pigs will fluctuate and rise in the second half of the year, mainly due to seasonal rebounds. The specific position of the price of pigs needs to be comprehensively analyzed for changes in supply and demand.
It is worth noting that the number of breeding sows in the country is limited in the early stage, and the period of deep loss is short and discontinuous.
According to data from the Ministry of Agriculture and Rural Affairs, after the outbreak of African swine fever, it will reach a high of 45.64 million in June 2021, and will drop to 41.77 million in April 2022, with a production capacity of 3.87 million, a decrease of about 8.5%.
In May 2022, there were 41.92 million breeding sows nationwide, a 0.4% month-on-month increase compared to 41.77 million at the end of April. The production capacity has instead increased, which is higher than the state-regulated upper limit of 37-41 million.
This means that there is still the possibility of further reduction of industrial production capacity.
It is impossible to exceed the price high point of the previous "pig cycle"
The strong rise of the 09 contract, the main hog futures, shows that the market's bullish expectations for the price of pigs in September are increasing.
However, Zhu Zengyong, chief analyst for monitoring and early warning of the whole pork industry chain of the Ministry of Agriculture and Rural Affairs, believes that the price of pigs in September may be expected to be stable and moderate as a whole.
He said that from the perspective of live pig production capacity, the number of live pigs has remained at a high level. After the rapid rise in pig prices in stages, they will face a market correction, and pig prices will gradually return to a reasonable price level.
At the same time, the slaughtering of live pigs in the early stage and the possible release of frozen pork reserves in the future will have an impact on pig prices.
With the overall recovery of spot and futures, the industry expects that a new round of "pig cycle" has begun.
Liang Xing, fund manager of Cathay Pacific CSI Animal Husbandry ETF, believes that the price of live pigs is a seasonal rebound recently, and the subsequent price is likely to pull back again, and the pig cycle will continue to grind the bottom.
The real inflection point of the pig cycle may appear in August and September. "It is not ruled out that there is a possibility of grinding again, and then pushing it to the fourth quarter."
So, will the future high price of pigs exceed the high price of the previous "pig cycle"?
Zhu Zengyong said that from the perspective of the number of breeding sows, the number of live pigs has reached 42 million since the beginning of this year, and the supply of live pigs is guaranteed.
Affected by multiple factors, the price of pigs may deviate from the fundamentals of supply and demand in the short term, and it is expected to fluctuate around 17 yuan/kg in general.
He believes that starting from May, the stock of reproductive sows will end the downward trend for 10 consecutive months and start to pick up. In the later period, the supply of pork will still be relatively abundant. Especially since the third quarter, pork imports will increase. It is unlikely that pig prices will continue to rise sharply.
Xu Hongzhi said that the price high point of the new round of "pig cycle" is expected to peak in the spring of 2023, and the price will reach 25-30 yuan/kg. However, it is impossible to exceed the price high point of the previous round of "pig cycle". .
The reason is that the price of pigs in the last round of "pig cycle" was able to hit a record high, mainly because the production capacity of live pigs was almost halved due to the disturbance of the African swine fever epidemic.
In contrast, the new round of "pig cycle" to reduce production capacity is only a normal reduction in the cycle caused by the industry's profit and loss.
As for the African swine fever epidemic, Xu Hongzhi believes that although there are still obvious threats, it is basically controllable.
Whether it is a large-scale enterprise or a small retail investor, whether it is a self-propagating and self-supporting model or an outsourcing fattening model, after the impact of the epidemic in the past four years, they have each worked out a set of effective prevention and control systems.
Due to various expenditures on prevention and control, the cost of pig breeding has increased by at least 2-3 yuan/kg compared with that before the epidemic. While raising the bottom of the pig cycle price, it also intensified the degree of competition in the industry.