New forces in the pig farming industry are gradually taking shape; will pig prices continue to rise before the Chinese New Year?
This year's domestic live pig prices can be described as unremarkable, with thrills but no real danger, and a basically stable price trend. The benefits for farmers can be considered stable. Apart from the price fluctuations after the May Day and National Day holidays, with brief slight declines, pig prices maintained a rhythm of small gradual increases throughout the year. As farmers increased their herds driven by profits, the national average live pig price slowly and rationally fell from the high of 9.6 yuan/jin at the beginning of the year to the annual low of 7.5 yuan/jin after the National Day double holiday. But this low price did not last long, only about two weeks, before prices showed signs of warming again and continued to the current high price of 9 yuan/jin.
From what we have learned from grassroots farmers and some farms, the current live pig inventory is generally lower compared to previous years. In some areas, the earlier outbreak of foot-and-mouth disease made farmers not very enthusiastic about restocking. The reasons for this mentality are: first, the current continuous rise in live pig prices has also affected the constantly refreshing prices of piglets, increasing restocking costs. Some farmers worry about purchasing piglets at high prices and fear that pig prices will fall after the Chinese New Year, damaging farming profits. Second, it is currently winter, and while farming costs increase, especially north of the Yellow River, this is also the peak season for epidemic outbreaks. Out of risk control, seeking stability before the Chinese New Year, restocking has been somewhat passive, with some cautious farmers leaving their pens empty.
From the consumption level and consumption habits of our country in recent years, the total consumption of pork has basically maintained a weak growth. This is due both to the slowing growth of the consumer population and to people's continuous improvement of healthy eating and dietary structure. People's consumption of pork has also begun to become more refined, developing from quantity to high demands for quality. From the actual consumption situation in grassroots markets, it is not difficult to see that consumers' requirements for pork quality are constantly increasing. The previous general pork consumption for the purpose of enhancing nutrition and that simple desire to improve meals no longer exist. What is most notable now is being picky, choosing the lean over the fat. Small but refined consumption occupies a dominant position among the vast number of consumers. The unanimous reaction from grassroots slaughterhouses and meat vendor stalls is that sales are too low. Previously, more than a dozen pigs could be sold in a day; now perhaps only one or a few pigs can be sold in a day. Although quite a few people come to buy meat, the quantity is pitifully small. Because sales are continuously declining, many stall merchants, in order to maintain their income, have to insist on a relatively high pork price, so that consumers in many places keep complaining: live pig prices are not high, but pork is not cheap! Usually, on the eve of every traditional Chinese lunar festival, there is a peak in pork consumption. Pig prices are released positively in advance, markets and slaughterhouses purchase actively, and pork prices also rise quite noticeably, because consumption is concentrated at this time. It can be said that pork becomes indispensable for visiting relatives and friends and entertaining guests. In recent years, as people's living standards have gradually improved, that sense of closeness to pork has gradually faded. At banquets, what is most often left over is the fatty pork. This change in dietary habits is deepening its impact on pork consumption year by year, so that in recent years the pork consumption market often shows busy seasons that are not busy and off-seasons that are not off, with few surprises of so-called consumption peaks. Even if sales increase somewhat during festivals, it is very limited.
From the current mentality of farmers, what is reflected is a certain and unanimous belief that pig prices will definitely rise before the Chinese New Year this year. Why say this? Because pig prices have been rising slightly for nearly a year this year, without excessively intense price fluctuations. Although the two earlier price declines once fell to the loss-making price of 7.5 yuan/jin, they lasted only a short time, then rebounded again and quickly recovered to a rational price range, maintaining a reasonable space for farming profits. The appearance of this market situation undoubtedly gave the vast number of farmers a reassurance. The most direct understanding is the feeling that this year's pig inventory is not large. So will pig prices really continue to rise before the Chinese New Year as everyone feels? Is there really a shortage of pigs in the market? However, the author does not think so. The reasons are: first, according to the current grassroots farming situation, although the inventory is lower than in previous years, it is still acceptable; second, the profits of slaughtering enterprises are constrained by the suppression of imported pork prices and are not optimistic, so they are not active in purchasing live pigs; third, although domestic inflation is currently picking up and prices have risen considerably recently, one point is very obvious: against the background of the economic environment declining, this year the vast number of consumers clearly feel that spending is somewhat difficult and cautious. Slowing income undoubtedly restricts people's desire to consume. Therefore, based on the current actual situation, before the Chinese New Year the live pig market may experience two frequent price fluctuations, but the range will be limited.
First, with the upcoming solar calendar New Year, some cautious farmers will sell the finishing pigs in their pens at this time to seek steady returns, because experiential operation is the basic industry rule for many farmers. At the same time, we should also see that the holiday period for the solar calendar New Year is not long, and this festival's role in driving a pork consumption peak is fading year by year. So personally, I believe that before the solar calendar New Year, the volume of live pigs sent to market will be relatively active, which will give a small impact to the currently seemingly hot live pig market. Short-term market supply will be somewhat loose, and it is expected that around the solar calendar New Year live pig prices will have a small decline of about 0.5 yuan/jin.
Second, after a wave of active market releases before the solar calendar New Year and a brief adjustment of prices surging and then falling back, farmers will welcome the real peak of pork consumption: the Spring Festival. Given the current sluggish pork consumption, it is expected that only after the 15th day of the twelfth lunar month (excluding the factor of imported pork being put on the market) will purchasing in the live pig market truly enter its stride. At that time, live pig prices may improve slightly, but by no means with the constant surprises imagined. Judging from the current balance point between mainstream market prices and imported pork, it would already be a luxury for live pigs to break through 9 yuan/jin! According to market information, the current live pig prices from north to south are: Northeast region 8.5-9.0 yuan/jin, North China region 8.3-8.8 yuan/jin, Yangtze River basin region 8.2-8.7 yuan/jin, Northwest and Southwest regions 8.3-8.7 yuan/jin. According to regional differences in consumption habits and different marketing rhythms, we can sense that changes in pig prices basically transmit from north to south in sequence. The Northeast market will naturally be the first to open the consumption prelude. Around the Winter Solstice solar term, the Northeast will enter the pre-Chinese New Year stocking consumption peak, and market consumption lasts a long time. From the current inventory and live pig supply in the Northeast, it is in a state of tight balance between supply and demand. The supply force does not have as serious a gap as imagined, so once the volume sent to market is active in the near term, the market price is bound to have a small pullback.
Third, pig prices in North China, South China, East China and Northwest China have risen slightly, farmers have a relatively strong reluctance to sell, and a certain psychological expectation of 9 yuan/jin for pig prices has been reached. Judging from the current survival mentality of slaughtering levels regarding profits and the adjustment of live pig purchase prices, they are clearly not active enough. Based on the current actual transaction prices, it will be difficult for the market to show overly aggressive prices in the short term. Based on the current increased reluctance to sell, it can be expected that many farmers may hold their pigs until the solar calendar New Year or before the Chinese New Year. If this causes concentrated releases to market, it will inevitably create short-term oversupply and cause slaughtering enterprises to prices.
While we hope for pig prices to continue rising for higher profits, we should also appropriately look at the current state of this industry. This year live pig prices have remained high. Under the temptation of profits and the stimulus of the state's opening up of the land approval process for the farming industry this year, the reserve new forces in the pig farming industry are also gradually forming. The author visited many places and found that many friends have begun to enter this industry, and once they start, they do so on a grand scale. Although this phenomenon is somewhat less intense than the Great Leap Forward-style atmosphere of previous years, it is a dangerous signal for the industry. From this we can easily imagine that in the future pig inventory will continue to rise, piglet prices will climb, and finishing pig prices will gradually show a stable but weak trend. Considering changes in market trends, the so-called experience of the past cannot be used as a standard for measurement, but only as a reference, because today's market changes (apart from special price fluctuations caused by major epidemics) are not governed by patterns, but are driven by changes in consumer concepts led by the times and by the domestic and international price game under policy guidance, prompting everyone to reunderstand this market. (Special contributor Tianyu, article from the exclusive original content of Agricultural Products Futures Network)