Before May Day, Science for Agriculture had made an analysis and forecast on May Day pig prices, and at that time said that there was a high probability of a "prices always fall during holidays" market during May Day, and sure enough, May Day indeed did not see the holiday price rise that most farmers had hoped for. Because live pig prices kept falling, many farmers were even preparing to exit the pig farming market, not only because of the decline, but even more seriously because farming costs kept climbing, making things even worse for the farming industry.

Friends familiar with pig price trends in the past two years may be relatively clear that pig prices in 2016 and 2017 were still fairly good, and many farmers expanded their farming capacity. But what this directly led to was an imbalance in supply and demand in the live pig market, which was inevitable, just like the principle behind this year's garlic prices. Since after the 2018 Spring Festival, pig prices quickly turned downward, with the decline even exceeding 20%, and many farmers lamented that prices had fallen to a new low for pig prices in only eight years.

Now that one third of 2018 has already passed, judging from the current market and supply-demand conditions, Science for Agriculture believes that pig prices in the second half of the year will hardly be optimistic, but it is quite likely that pig prices will gradually stabilize. Below are a few specific reasons.

Live pig supply exceeds demand

Because live pig market conditions were relatively good in the past two years, a large number of farmers switched into the live pig farming industry, and this follow-the-crowd situation directly led to the current imbalance in supply and demand. Now, as live pig prices remain persistently sluggish, quite a few farmers have already withdrawn from the farming industry, but the current supply-demand relationship in the market still has not improved. Reflected in the market, this is the price of piglets. At present, the decline in piglet prices is far smaller than the decline in live pig prices, which also shows that many farmers are still actively stocking up and are full of expectations for future live pig farming. Therefore, this supply-demand relationship will not improve in the short term.

Farmers are slow to exit the market

It was just mentioned that because of the current problem of sluggish pig prices, farmers have already begun to exit the market. In addition, the Ministry of Commerce news on April 4 this year about imposing a 25% tariff on soybeans produced in the United States also directly caused domestic feed prices to climb sharply. Within just one week after the news was announced, soybean meal prices rose by 5%. However, although many small farmers are withdrawing from the market because of funding problems, this is still a gradual process and will not reverse quickly, and it will not greatly change the current market situation. After all, the cyclical nature of live pig farming is too great, and a short-term reversal is unlikely.

There is limited room for pig prices to fall further

Current pig prices are basically stable around 5 yuan, and this price level has been maintained for nearly a month. Although the market price also once fell below five yuan, it quickly rebounded to the 5 yuan range. From the perspective of live pig investment costs, the cost price for most farmers is 6 yuan per jin, and the current price has generally fallen below farmers' cost line, while the current price is also basically stable in the 5 yuan range. Therefore, Science for Agriculture believes that there is already very limited room for the current market price to fall further.

Based on the above analysis, I personally believe that the current market situation has basically stabilized, with very limited room for further decline, and the market in the second half of the year will also stabilize after farmers gradually reduce capacity, and the future is expected to gradually turn around.

The above is a little view shared with you by Science for Agriculture, and I hope it is helpful to you.