Demand for live pigs may grow significantly, and pig prices are expected to enter an upward channel again

As the end of the year approaches, killing New Year pigs, eating paozhu soup, smoking cured meat, and making sausages have once again become hot topics. Unlike previous years, although farmers are going all out to prepare supplies, affected by the earlier tight supply, live pig prices have recently entered an upward channel again, with prices up 7.92% year on year.

Peak season mode begins

With only a little more than one month until the 2017 Spring Festival, the annual New Year pig culture festivals have begun grandly again at farmhouses and mountain resorts in suburban towns and streets in Nanchuan, Banan, Yubei, Bishan, Jiulongpo and other places, and a series of folk activities such as killing New Year pigs, eating paozhu soup, smoking cured meat, and making sausages are in full swing, with crowds of visitors.

However, this year's prices are not as “affordable” as in previous years. “One fixed price: black pigs 18 yuan/jin, white pigs 13 yuan/jin, processing fee 200 yuan, paozhu soup 380 yuan/table (15 dishes, with side dishes).” said the owner of a farmhouse in Yufeng Mountain, Yubei. The pigs his family uses are all grain-fed pigs bought from farmers. This year, the processing fee and New Year pig banquet prices are basically the same as in previous years, while live pig prices have risen somewhat, by 1—2 yuan/jin. Prices for killing New Year pigs at farms in Daguan, Nanchuan, Baishiyi, Jiulongpo, Shengdeng Mountain, Banan and other places are also roughly similar, mostly an increase of one or two yuan per jin over the live pig price.

“Citizens going to farmhouses to kill New Year pigs counts only as scattered consumption. Our company's bulk purchases for smoking cured meat are at higher prices than last year.” said Zhao Xiaochun, chairman of Chengkou County Zhao Xiaochun Wild Food Development Co., Ltd., a municipal-level leading enterprise. He introduced that the company is currently producing cured meat on a large centralized scale, with live pig purchases reaching over 1,000 tonnes at a price of around 10 yuan/jin, while the price was only eight or nine yuan per jin the year before last.

The latest monitoring data from the Agricultural Information Center of the Municipal Agriculture Commission also shows that in the 47th week, the average purchase price of live pigs in Chongqing was 9.42 yuan/jin, up 1.63% week on week, showing a steady slight increase and a clear year-on-year rise of 7.92%, much higher than the national average of 10.63%. However, the average retail prices of pork belly, pork ribs, collar butt, and lean pork were roughly flat week on week.

Pig prices rise again

“Winter is originally the peak consumption season for pork, and seasonal factors account for a relatively large share of this round of slight increase in live pig prices.” an expert from the Municipal Agriculture Commission analyzed. Since the beginning of this year, pork prices have shown an upward trend. By May and June, live pig prices broke through the “ten-yuan mark,” and the market lever tilted toward the supply side. The pig-to-grain ratio once reached above 8:1. Stimulated by high profits, farmers increased production efforts, and afterward the supply-demand relationship eased somewhat, and live pig prices also returned rationally. However, after all, a certain cycle is needed from breeding sows to farrowing and fattening.

Right now, the northern region has entered the ice and snow season, and citizens' demand for pork has increased somewhat, while farmers' output has declined due to severe cold weather; in the southern region, at the end of the year there are customs such as killing New Year pigs, smoking cured meat, and making sausages, which will also increase demand for pork, while earlier market supply was relatively tight, thus pushing up this round of live pig price increases.

Market participants expect that New Year's Day 2017 and the Spring Festival both fall in January. Driven by the holiday effect, market demand may grow relatively significantly, while the supply side will continue to be relatively tight, and pig prices in the later market are very likely to remain high and fluctuate.