The market suddenly "faces", is pork going to fall?

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  In August, pork prices remained high, but the stock market changed suddenly, and pork concept stocks pulled back sharply.

In the context of rapid recovery of production, some breeding companies worry about overcapacity and the price of meat falling.

But experts believe that the pig production capacity is still at the bottom.

In the short term, pork supply and demand are still tight; in the long term, pig farming needs to increase investment and increase the degree of scale to withstand the impact of cyclical fluctuations.

  "Pork prices fell for ten consecutive years", "20 yuan era is coming to an end", "meat prices ushered in a diving"... Recently, all walks of life are increasingly expecting pork prices to usher in a turning point.

Although the latest data released by the National Bureau of Statistics show that pork prices in August still maintained a year-on-year increase of 52.6%, the attitude of the market seems to be changing.

  On September 14, the pork concept stocks weakened in the A-share market, and many leading stocks pulled back sharply. Such adjustments have continued for a week.

And just less than half a month ago, the pig companies just released their gorgeous semi-annual reports. Many companies have soared net profits, and the profit growth of more than ten times or even dozens of times can be described as a breakthrough.

  Under the background that meat prices are still strong and performance is generally breaking out, why does the market suddenly switch sorrows and joys? Is pork really not "sweet"?

On the consumer side, how far is cheap meat from ordinary people’s tables, and can the subsequent pork price remain stable?

A reporter from the Workers’ Daily conducted an interview and investigation on this.

  With the accelerated recovery of production capacity, where did the pessimistic expectations come from?

  In the opinion of some industry insiders, the decline of pork concept stocks is not only due to technical adjustment factors, but also reflects the market's worries about the rapid growth of pork production capacity.

  It is understood that since August last year, due to the superimposed influence of various factors, the production capacity of live pigs has been tight, the price of pork has risen rapidly, and the income of breeding has soared.

The reporter learned that the current income from breeding a 120 kg fat pig has reached more than 2,000 yuan, a historical high.

At the same time, the central and local governments have also issued a series of supporting policies to increase support for pig breeding and production in terms of land use, finance, technology, and transportation.

  Under the dual benefits of the market and policies, the enthusiasm of enterprises and farmers is high.

According to data released by the China Meat Association at the 2020 China International Meat Industry Week, the number of reproductive sows has continued to increase month-on-month since October last year, and the number of live pigs has continued to rise. In the first half of this year, the year-on-year decline in the number of live pigs has narrowed. ……The production capacity of live pigs is recovering rapidly.

  Looking back on the resumption and expansion of live pig production over the past six months, Kong Liang, deputy director of the Animal Husbandry and Veterinary Bureau of the Ministry of Agriculture and Rural Affairs, said that the progress was better than expected.

  However, the increasingly optimistic production situation has led some companies to brew pessimistic expectations.

"According to incomplete statistics, the scale of the pig raising projects under construction or to be built by the major pig raising companies in China will reach 2 billion heads, while the consumption of pork in China is only 650 million heads." A few days ago, Tang Renshen Chairman Tao Yishan said, In the future, the hog industry may face a disaster with overcapacity.

"By 2022, the domestic meat price will fall to 10 yuan a kilogram. I am even more pessimistic. By then, it is entirely possible for the meat price to fall to 4 to 5 yuan."

  Later, Tangrenshen Group Co., Ltd. responded that the above remarks do not represent the company's complete view of the pig industry, but the pig industry does have a risk of cyclical fluctuations. If the pig industry expands wildly in the future, the price of pigs will indeed fall to a lower level. .

  Live pig production is facing a turning point, when will the turning point of meat price come?

  So, is the expansion and re-production of the pig industry "crazy"?

According to Zhu Zengyong, an associate researcher at the Beijing Institute of Animal Husbandry and Veterinary Medicine, Chinese Academy of Agricultural Sciences, although the current recovery of production capacity is fast, the overall recovery is still in the bottom stage.

  "From the statistics of the Bureau of Statistics, at the end of 2019, the level of live pig stock has dropped to the level between 1995 and 2000. The supply in the first three quarters of this year was still at the bottom of the rebound, and obvious recovery growth will have to wait until after the fourth quarter. "Zhu Zengyong said.

  According to Zhu Zengyong, for a period of time, various localities and enterprises have been expanding their production intensively and on a large scale.

But from investment to production, and then to the real release of production capacity, there is still a process.

"Under normal circumstances, it is not bad to achieve 20% of the target production capacity that year."

  "In July, the national pig stock achieved a positive year-on-year increase for the first time since April 2018." Zhou Lin, an associate researcher at the Institute of Food and Nutrition Development of the Ministry of Agriculture and Rural Affairs, said that this is after the year-on-year increase in the breeding sow population in June. , Another important turning point for the recovery of pig production capacity.

However, the current pork supply is still in a tightly balanced state, and it will take time to effectively improve the pork supply.

  The reporter learned that as an important basic indicator of the supply of live pigs, it usually takes at least 10 months for the stock of breeding sows to show up as an increase in market supply.

The stock of pigs, another key indicator, also has a lagging effect on prices.

  Compared with the supply side, the recovery of demand is obviously faster and more direct.

With the stabilization of the domestic epidemic situation, enterprises have resumed work and production, catering consumption has gradually recovered, and primary and secondary school students across the country have resumed school in an orderly manner. Recently, demand for pork has expanded.

  "Under the superimposed effect of the National Day and Mid-Autumn Festival, pork consumption demand is expected to have a short-term consumption climax. With the two-way growth of pork supply and demand, it is expected that pork prices will continue to fluctuate at a high level in the short term." Zhou Lynn said.

  Why is the "pig cycle" fluctuating so drastically?

  Although there are certain fluctuations in short-term demand, as a large pork consumer, my country's long-term pork demand remains relatively stable.

The production side has always been plagued by the "pig cycle". The pork concept stocks are "extremely happy and sorrowful" because of the capital market's fear of the "pig cycle".

  "Cyclicality is one of the distinguishing characteristics of agriculture. Historical data shows that the length of the pig cycle is generally 3 to 4 years. Correctly predicting the pig cycle is of great significance to agricultural investment." said Yao Shuang, Manager of Harvest Agricultural Industry Fund.

  When the market supply is tight, the price of pork rises, and farmers and companies increase production capacity together; after production and supply rebounds, the price of pork falls, farmers and companies lose money, bankruptcy and exit... In recent years, pig farming has been in a cycle Repeatedly staged the switch between tragic and joyful plots.

In this round of pig cycle, the volatility is large and the duration is long, making the market more sensitive to small changes in the cycle.

  Zhu Zengyong said that this round of pig cycle is affected by multiple factors such as the decline in pig production capacity and the impact of African swine fever. The rapid and large decline in production capacity has led to a rapid increase in pork prices.

  Despite the volatility, some positive new changes are also emerging.

"The threshold for breeding has been significantly increased, which has led to the improvement of scale and organization." According to Zhu Zengyong, in 2019, the proportion of farmers with more than 500 heads of slaughter has increased to 53%, and this proportion is expected to increase in the future. To 60%.

  Large-scale breeding is generally considered to be an important breakthrough for pig breeding to resist the impact of the cycle and maintain the stability of the industry, which can effectively reduce the blindness of market players and enhance the ability to resist risks.

  Yao Shuang said: "At present, the concentration of the pig industry is still relatively low. The 20 largest domestic pig companies have a combined market share of only 11% in the pig industry, and there is still huge room for improvement."