2016 Pig Price Forecast: The Strongest Rise Will Come in Mid-to-Late December

How is the pig price market at the end of 2016? Pig prices in the north are overall rising slightly, with the rise in the three northeastern provinces coming to a halt and small local adjustments, while Hebei pig prices have also hit the brakes. In addition, two weeks before the Spring Festival, the northern region will begin to enter a small peak in demand for killing New Year pigs, but its demand volume and duration are slightly weaker than those for making cured meat. In the short term, northern pig prices are expected to rise slightly.

At present, many places in the south have already begun making cured meat, and consumption will also increase somewhat. If cured meat production in the south gets fully underway, it will be like unleashing an unstoppable force. Southern pig prices are expected to rise steadily with small gains. Pig prices have just risen to the high point range of 8.5-9 yuan/jin, and are expected to remain in this high range for more than 1 month.

We suggest that pig farmers keep a calm mind, sell at the right time, and secure their profits. The price gap within 8.5-9 yuan/jin is only a few mao, and every further rise faces great resistance. It is very likely that waiting stubbornly at 8.6 yuan/jin for more than half a month will still make it hard to rise to 8.8 yuan/jin. The additional profit brought by such waiting is very limited, while the market risk borne is enormous.

Northeast pig prices stabilized after consecutive declines last weekend, while Beijing and Tianjin, the main northern sales areas, raised prices, and farmers' reluctance to sell continued to support pig prices. In Central China, East China and other regions, cured meat production has increased demand for pork, large-scale farms generally held prices firm, and it was relatively difficult for slaughterhouses to push prices down, so prices are likely to rise rather than fall in the short term. According to feedback from some farmers, as the deadline for demolishing pig farms in some areas of Guangdong approaches, slaughterhouses took the opportunity to press prices down, leading to more local sales and a weak slight adjustment in pig prices.

Market Highlight Two: Pig Prices in the Southwest Mostly Rise Above 18 yuan

Pig prices as a whole continued to rise, but the increase was very small. The rise in the three northeastern provinces paused, with small local fluctuations and adjustments beginning. In the southwest, affected by cured meat production and the scattered start of sausage stuffing, market demand received a certain boost. Except for Chongqing, pig prices in Sichuan, Guizhou and Yunnan all rose above 18 yuan/kg. Recently, large-scale pig farms held prices firm, driving farmers' confidence in a better future market, and reluctance to sell and holding back pigs intensified, increasing the difficulty for slaughtering enterprises to purchase. However, farmers must be reminded that although pig prices still have some room to rise as market demand recovers further later, market variables remain. In particular, winter is a period of high disease incidence. If an epidemic occurs, it will lead to concentrated sales of live pigs, and at that time slaughtering enterprises will certainly not be soft-hearted in pressing prices down.

Market Highlight Three: Why Are Pig Prices in South China the Lowest in the Country?

The southwest and south China have historically been the regions with the highest per capita pork consumption in the country. Guizhou, Chongqing, Sichuan, Yunnan, Guangdong and Hunan are the 6 provinces (municipalities) with the highest pork consumption nationwide, and were once the country's main live pig production areas. So why are pig prices in south China the lowest in the country?

Netizen “Empty Hands to Catch the White Wolf” believes there are three main factors dragging down pig prices in south China: first, south China was earlier hit by cheap Vietnamese pigs, which pushed market prices down; second, south China was earlier affected by scattered foot-and-mouth disease and influenza, which increased sales volume, and pig traders took the opportunity to suppress prices; third, south China is currently seeing unprecedented large-scale and wide-ranging forced demolitions, with city and county pig farms once again selling in a concentrated manner.

The 2014 Regulations on the Prevention and Control of Pollution from Large-Scale Livestock and Poultry Breeding, the 2015 Guiding Opinions on Promoting the Adjustment and Optimization of the Layout of Live Pig Breeding in the Southern Water Network Region, and the Water Pollution Prevention and Control Action Plan all require advancing environmentally friendly live pig breeding models. Guangdong Province, as one of the 11 provinces and municipalities in the southern water network region, was designated as a restricted development zone. On April 20 this year, the Ministry of Agriculture issued the first development plan for the live pig breeding industry for the next five years since the founding of New China. Based on environmental carrying capacity, the plan clearly states that the layout of live pig breeding should shift from south China and east China to the northeast and northwest regions.

It is expected that after the wave of demolitions, the share of live pig inventory and pork output in south China will decline year by year. Guangdong, however, is a major pork-consuming province. Against the backdrop of the government's crackdown on smuggled pork from Vietnam, pig prices are expected to return to the top levels nationwide.

Mid-to-Late This Month May Be the Period With the Strongest Pig Price Rise

Entering December, we can basically consider ourselves to have entered the traditional peak consumption season. At present, many places in the south have already begun making cured meat, and production is expected to peak in mid-to-late this month. This period is also one requiring special attention from farmers, because the demand peak is also the period when pig prices rise most strongly, as well as a period of relatively concentrated sales, and even more a period when slaughtering enterprises try every means to press prices down and force volume. Therefore, farmers should pay special attention, always watch the price difference between heavy pigs and standard pigs, and try to avoid concentrated sales.

There is another point. We clearly know when the peak demand season begins, but we must understand even more clearly when the peak demand season ends. Generally, after entering the twelfth lunar month, about two weeks before the Spring Festival, the northern region will begin to enter a small peak in demand for killing New Year pigs, but the demand strength and duration are both smaller than those for making cured meat. Killing New Year pigs also comes near the end of the year, so when the northern New Year pig killing ends, it basically signals the end of the year's highest demand peak, and the fundamentals of supply and demand will reverse rapidly.

Be Alert That Northern Pig Prices May Stagnate or Even Edge Down in the Short Term

In November, live pig prices overall showed a slight upward trend. In particular, the rise in the northern region was noticeably higher than in the southern region, with the northeast once leading the gains, and the pattern of pig prices rising in the north and staying stable in the south was very obvious. However, after northeast pig prices broke through 8.5 yuan, the increase narrowed and prices edged down last weekend.

This was mainly because last month weather factors had a relatively large impact on the northern region. Snowfall and temperature drops hindered live pig trading and transportation, causing pig supply to tighten and making procurement difficult for enterprises. Combined with a slight increase in consumption, pig prices continued to rise. However, this also backlogged part of production capacity to a certain extent, and these pig sources must eventually be released. There is still one month before the twelfth lunar month, and northern New Year pig killing still needs to wait. Therefore, after the impact of weather factors weakens, market demand is relatively weak and pig prices lack upward momentum. In the short term, the northern region may see stagnation or even a slight decline, while market demand in the southern region provides some support for pig prices and may start an upward trend. It is recommended that farmers follow the principle of selling at the right time and securing profits, which can avoid concentrated sales creating opportunities for slaughterhouses to jointly press prices down. Selling in a scattered manner can defuse the risk of a sharp drop.