Why does the falling pig price make some happy and others worried?
Since the beginning of this year, pork prices have remained high for a long time, and the public's "shopping basket" has felt heavy to carry, with everyone saying they cannot afford to eat it. However, experts recently predicted that pig prices will fall in the second half of the year, and the public will find it easier to carry their "shopping basket."
Since last year, pig prices have soared all the way, rising for 16 consecutive months, but due to the impact of multiple factors, they began to decline after this year's Dragon Boat Festival. The trend of pig prices falling from a high level is obvious, and the national average live pig price is still close to 20 yuan/kg.
From the consumption side, the prices of some beef and mutton on the market are actually lower than pork, and pork consumption has been restrained and replaced. In some vegetable markets, pork stalls attract no buyers, and the stall owners simply lie down on their counters and sleep. In addition, with the arrival of high temperatures, the lean season for pork consumption has begun, and schools are on holiday in July, reducing concentrated consumption.
From the pork supply side, farmers earlier held back livestock excessively, and there was generally a plan to sell during the May-August period to seize the high point of pig prices. At present, there are relatively many large pigs weighing more than 300 jin; at the same time, feed prices have recently risen, increasing the cost of holding livestock back, leading to concentrated selling; the average slaughter weight has clearly increased, which to a certain extent has also increased pork supply.
At the same time, data recently released by relevant institutions show that May pork imports were 163,500 tons, up 37.86% month on month and up 202% year on year. From January to May, pork imports were 560,000 tons, and the import volume in the first 5 months has already exceeded the whole of 2014. It is expected that June imports will reach 180,000 tons, and for the whole of 2016 they are expected to reach 1.2 million tons. The concentrated and large volume of imported meat will also affect the price trend of domestic live pigs and pork in the market.
At the other end of the industrial chain, the high price of live pigs has made production costs in the slaughtering industry too high, leading to widespread losses, and many small and medium-sized slaughtering enterprises have even shut down and stopped production. To reduce costs and protect profits, meat product manufacturers have used large amounts of imported pork to replace domestic meat. Coupled with the recent sluggish pork consumption, slaughter volume has also declined somewhat. At present, in the live pig market, the price of large pigs weighing more than 300 jin is lower than that of standard pigs, the turning point of supply and demand has appeared, and pricing power in the live pig market may be shifting.
A person in charge of a statistics department said that meat prices reached their recent peak in May, 1-2 months later than under normal conditions, and this was due to the misleading effect of earlier public opinion. In fact, meat prices stopped falling in March last year and rebounded in April. According to market rules, they should have fallen in March and April this year. However, in early March, data showing that "the inventory of breeding sows continued to decline year on year and month on month" was made public, which seriously affected the trend of the live pig and pork markets.
The person in charge also said that according to market rules, after meat prices stopped falling and rebounded in March and April last year, the month-on-month inventory of breeding sows should at the latest have stopped declining in June. Even if there were not enough reserve sows at that time, at the very least the culling of breeding sows would have been delayed, and their inventory would have increased month on month before the end of last year.
The person in charge also said that some large breeding groups have seen the slaughter weight of live pigs drop from 120 kg one month ago to 110 kg or even 109 kg recently. Free-range households and small and medium-sized farms have been "played" again.
Feng Yonghui, chief analyst of the China Live Pig Early Warning Network, suggested that pig farmers must not wait stubbornly during this period for the so-called high points of 22 yuan/kg or even 24 yuan/kg predicted by certain individuals and institutions, and should sell at the appropriate time according to actual conditions.