Pig prices keep falling: what impact does the Olympics have on pig farmers?

Pig prices kept rising, and when everyone expected July and August to be the peak for pig prices, no one anticipated that concentrated market releases of cattle pigs in June would cause pig prices to slide. At present, pig prices are extremely fragile, rising and falling unpredictably, and every region is in a stage of slight adjustment. There are too many factors affecting pig prices, farmers have no say in the market, and pig prices fluctuate at a high level. Facing these ups and downs in pig prices is like watching every final at the Olympics, leaving everyone trembling with fear.

A few days ago, the National Bureau of Statistics released the average price changes of major foods in 50 cities (August 1-10, 2016), among which the prices of the two pork categories, hind leg meat and pork belly, fell 0.6% and 0.7% month-on-month respectively, while the prices of vegetables including Chinese cabbage, rapeseed, celery, cucumber and yardlong beans rose 4.6%, 3.4%, 1.4%, 1.5% and 5.6% month-on-month respectively.

Liu Zhe, assistant to the president of Wanbo New Economic Research Institute, said in an interview with a Securities Daily reporter that judging from the latest data, pork prices continue to fall, the pace of vegetable price increases is slowing, the impact of floods and waterlogging has weakened, egg prices have risen slightly, other food prices are relatively stable, and CPI is expected to continue falling.

Fang Juntao, an analyst at Zhuochuang Information, said in an interview with a Securities Daily reporter that judging from the average changes in major food prices in 50 cities, pork prices are generally continuing to decline. On the one hand, August is the off-season for pork consumption; on the other hand, because of the previous large-scale floods and waterlogging across the country, pig farmers also accelerated the release of live pigs to prevent sudden outbreaks of disease, which also put some restraint on pork prices. It cannot be ruled out that pork prices will continue to trend lower in the future.

“Because pork prices account for a relatively large weight in China's CPI, at more than 2.3%, the fall in pork prices will drag down CPI in August to some extent.” Fang Juntao predicted.

At the same time, during this period, affected by floods and waterlogging, vegetable prices showed relatively large increases. Fang Juntao predicted, “Vegetable prices will become a major factor pushing up CPI in August, but their impact will not be too great.”

From the supply side, there are two reasons. One is a marked decline in the number of breeding sows. According to monitoring by the Ministry of Agriculture, at 4,000 monitoring points in July 2016, the number of breeding sows was 37.52 million, down 80,000 from the previous month, down 0.2% month-on-month and down 3.2% year-on-year; the number of live pigs was 375.96 million, down 380,000 from the previous month, down 0.1% month-on-month and down 2.4% year-on-year.

The other is that live pig epidemics are relatively serious. Last winter brought the strongest cold wave, and problems such as piglet diarrhea and swine flu were relatively serious, so the survival rate of piglets was not high, especially in the south. The reduction in live pig supply intensified the situation of supply falling short of demand, which was favorable to pig price trends.

From the demand side, after late August, the start of school and the arrival of the Mid-Autumn Festival increased demand for live pigs. As the scorching summer ends, the off-season for demand will improve somewhat, and tightening supply will quickly become apparent. Slaughterhouse buyers will find procurement more difficult, and the rebound in pig prices will strengthen.

The current market environment is favorable to rising pig prices, and it has also given farmers confidence to recover losses and maintain their enthusiasm for raising pigs. Raising pigs is the foundation of pig farmers, and pig prices are the courage that supports pig farmers. However, although various factors are favorable to pig price trends, imported pork remains an unstable factor affecting domestic pig price trends.

The reason the Olympics fill people with such passion is national honor, and the reason pig prices attract such attention is each person's own interests. But no matter the outcome, the first thing needed is strength. For athletes, accumulated training strength day after day is the foundation; for pig farmers, raising pigs well is the key.