As Mid-Autumn Festival approaches, can pig prices take off again?

This year, profits in pig farming once hit a new high in recent years, yet since June, pork prices have begun to fall. With the Mid-Autumn Festival approaching, can holiday consumption give pork prices a boost?

The current state of profitability in the pig farming industry

Although profits in pig farming once hit a new high in recent years this year, and industry insiders believe that the next year or two will be a good time to raise pigs, it cannot be denied that the cost of pig farming is getting higher and higher, while profits are gradually starting to decline.

Besides being related to costs, the more important reason is that more and more large capital is entering the farming industry, driving the farming industry to gradually move toward intensification and large-scale operation. In addition, the expansion and production layout of professional large pig enterprises are all on a grand scale, which has dealt a big blow to the traditional free-range model, and further dealt a blow to the previous pattern of sharp rises and falls in pig prices.

At the same time, it also marks that the era of huge profits in the farming industry is getting further and further away. In the future, fluctuations in pig prices will no longer be decided by small and medium-sized free-range farmers; large-scale pig farms will become the main force. Stronger risk resistance and advantages in the number of pigs and the scale of sows will mean that pig prices will not rise or fall sharply in a short period of time, playing a certain role in avoiding the pig cycle.

The pig market's "rush in together" and "disperse in a rush" is a chronic illness

In the past two years, the pig farming industry has undergone great changes, and this is a positive trend. But it cannot be denied that the current overall level of development of the farming industry is still not high, and the average annual slaughter scale of pig farmers is still relatively small. The production pattern of small scale and large groups still supports the situation of "rushing in together" and "dispersing in a rush," and the chronic illness of sharp rises and falls in the pig cycle has still not been fundamentally cured. Moreover, the bargaining power of our country's pig farmers is very weak, and they are easily suppressed and easily swept along by trends, always facing the problem of not being able to see the road clearly.

In addition, the problems of scattered pig farming and small scale are gradually being tackled as priorities, and with the government increasing efforts in environmental governance, labor costs are piling up and rising, and farmers face obstacles in both financial strength and psychological acceptance. Those exiting the market, those entering, those hesitating, those expanding production, and those watching form the many faces of the pig market. Add to this the large volume of imported pork, because foreign farms, due to their large scale, high degree of mechanization, and low costs, have an obvious price advantage. All of these are spurring the domestic pig farming industry to take strong medicine to cure its chronic illness.

Facing the pig cycle, some "flee" and some "hold on"

As for the pig cycle, farmers are often in a state of helplessness. In fact, the pig cycle arises because of us, yet we can only be blinded as those involved, and it seems this maze is also something we cannot conquer.

At present, pig prices are in a stage of high-level operation, but production capacity will always increase, and the downward pig cycle will always arrive, while rising costs naturally mean higher risks. But pigs cannot simply not be raised for a while just because the pig cycle arrives, so in the face of the pig cycle, some "flee" and some "hold on."

In fact, for farmers without fixed supply targets, they can only adjust their inventory according to market conditions, appropriately restocking when prices are good and selling as quickly as possible when prices are bad. Some farmers, however, have achieved an order-based production method, so that whether pig prices rise or fall, the purchase price remains stable, which both achieves the sustainability of operations and reduces the risks brought by the pig cycle.

At the present stage, the pig cycle can only have its risks avoided; it cannot yet be eliminated, so this remains a challenge for achieving long-term healthy development at all levels of the pig farming industry.

As for future pig prices, can they take off again?

A tight pig supply situation is hard to hide; after adjustment, pig prices are more likely to rise again

At present, pig prices continue to show a trend of stability with slight declines, with the downward trend in the north once again appearing obvious, the south remaining stable, and the central region showing mixed rises and falls. As for future pig prices, the industry generally maintains optimistic expectations, and apart from concerns about the weight of medium and large pigs in some areas, future resistance may not be great. Although most cattle pigs were consumed in June and July, it is impossible to completely clear held-back pigs, so there are worries that the proportion of large pigs in stock will rise in the future, leading to concentrated slaughter in September and causing pig prices to possibly fall back from highs.

However, the slaughter weight of pigs has already dropped noticeably, and large farms and free-range farmers still have the sentiment of holding prices up, so with the start of terminal pork consumption in September, even if there are held-back pigs, the tight pig supply situation will be hard to conceal, and pig prices are more likely to rise again after adjustment, but the overall increase will remain within a certain reasonable range, making it difficult for large rises or sharp rises to occur.

Pig prices stable with mixed rises and falls; rebound awaits demand boost

At present, there are no obvious signs of recovery on the demand side of the market, and the procurement volume of slaughtering enterprises has declined, so pig prices have therefore often shown a slight downward trend, but under the limitation of pig supply in the market, the downward force on pig prices is not great, and rising pig prices in some main sales areas can also lift prices in low-price areas, with domestic pig prices overall showing a stable trend of mixed rises and falls.

After the earlier concentrated slaughter and sell-off, the market's pig supply is generally not plentiful, and the slaughter weight of pigs has already dropped noticeably, showing that favorable factors on the supply side have already formed. Demand is currently weak, mainly waiting for its recovery. It is expected that after late August, as temperatures gradually cool and with the boost from schools reopening and Mid-Autumn Festival consumption, demand will also improve somewhat. Slaughter volume will also increase somewhat, and the rebound awaits a demand boost, with pig prices expected to rise accordingly.

Why pork imports give us the feeling that "the enemy is at the city gates"

The volume of imported pork in June and July kept hitting record highs, and given the current momentum, the amount of pork arriving in August may also continue to remain high, which will undoubtedly put further pressure on pig prices. Recently, pig prices had just gone through a sharp fall and were in a stage of gathering strength for a rise, but the large influx of imported pork into the market has also given us the feeling that "the enemy is at the city gates."

The large volume and low price of imported pork indeed have a considerable impact on the current pork market, and the pork import volume, which has repeatedly broken records since the beginning of this year, has truly worried farmers. Although it cannot play a leading role, it will still have a restraining effect on future rebounds in pig prices, and at present we also believe that imported pork will become an important uncertain factor affecting pig prices later on.

However, the impact of imported pork should be a long-term existing problem. As industry insiders say, as long as there is a price gap between domestic and foreign markets, when pig prices are high, the impulse of domestic pork traders to import "cheap foreign pigs" will always exist, as this is an important means for them to reduce procurement costs.

In the short term, pork prices are in a bull-bear game; high-level oscillation is the mainstream

The industry generally believes that in the short term pork prices will not rise much and are in a state of bull-bear game, with high-level oscillation becoming the mainstream trend. This is mainly based on consideration of the following three factors: first, the sharp rise in the first half of the year more or less overdrew the autumn market, and together with the release of held-back large pigs in the first half and the increase in piglet inventory data, this is bearish for short-term pork price gains; second, the pig farming volume in the north is generally greater than in the south, so even if prices in the south remain firm, once pig transport begins, northern pigs will continue to move south, dragging down pig prices in the south, though this is mainly speaking for demand that has not yet emerged from the off-season. Finally, there is the impact of the large influx of imported pork into the market.

In particular, in the short term we can clearly see the emergence of pig prices in the north and south. Once pork prices in the north slightly accelerate downward, it will become very obvious that southern pork prices maintain an oscillating pattern in place with a slight rebound. Moreover, in the near term, slaughtering enterprises do not face much difficulty in procurement, supply is relatively sufficient, and therefore slaughtering enterprises still have room for bargaining. On the whole, in the short-term bull-bear game in pork prices, high-level oscillation is the mainstream.

In late August, fluctuations in the pig price curve may not be too large

As for the future trend of the pig market, it is certain that the mainstream trend of pig prices remaining at a high level will continue, but given the market that has long been in consolidation without rebounding, and with the industry generally believing that the probability of a big rise in pig prices later is extremely low, everyone has generally begun to worry about whether slaughter, imported pork, and consumption will cause major fluctuations in future pig prices. In fact, what ultimately affects the pig price curve is still the market's supply-demand ratio. As long as changes on both the supply and demand sides are not large, the oscillating nature of pig prices will naturally diminish.

The trend of pig prices from June to August has actually been getting better and better, with the downward trend getting smaller and the upward trend becoming more obvious. The industry believes that after pig prices experienced a "feverish" trend in the first half of the year, some farmers reduced losses and increased income, spring and summer piglet restocking was relatively active, and given the broad sources of pork supply, the supply side is guaranteed. In the near term, pig slaughter is expected to continue to remain stable, and it is expected that pig price fluctuations in late this month will not be too large, possibly showing a stable and slightly weak operating trend, with small rebounds still accompanying it.