Pig farming falls below the cost line, farmers face the most severe losses in 3 years
The overlapping resonance of the political cycle and the economic cycle is dealing a sustained blow to the pig farming industry. A relevant research expert, in an interview with a Securities Times reporter, predicted that pig prices will continue to fall in the future, that this year's pig farming industry may become the year with the most severe losses in nearly 3 years, and that China may carry out multiple rounds of reserve purchases and regulation just as it did in 2010.
Frozen pork reserve purchases launched
The live pig market around the 2014 Spring Festival was a bit “cold”. In previous years, the Spring Festival period was a peak demand season, but since mid-December 2013, live pig prices have fallen relatively quickly. As of February 12, 2014, the national average live pig market price was 13.12 yuan per kg, and the pig-to-grain price ratio had fallen to 5.51:1, having been below the 6:1 break-even point for 5 consecutive weeks.
Data from Soozhu.com showed that as of February 8, the national pig-to-feed price ratio was 3.69:1, and the pig-to-grain price ratio was 5.22:1, down 23% and 18% year-on-year respectively, with the pig-to-grain ratio having been below the 6:1 break-even line for 4 consecutive weeks. At present, self-breeding and self-raising farms lose 212 yuan per head, while in the same period last year they made a profit of 90 yuan per head. Feng Yonghui, chief analyst at Soozhu.com, said this is the first time in nearly 10 years that pig farming has fallen below the cost line and dropped into deep losses during the peak demand season before the Spring Festival, and he predicted that 2014 may become the year with the most severe losses in nearly 3 years.
According to the provisions of the "Regulatory Plan for Alleviating Cyclical Fluctuations in Live Pig Market Prices," the National Development and Reform Commission issued an early warning on January 26, advising pig farmers to appropriately adjust their farming structure according to market price changes and promote a balance between supply and demand.
Under the effect of market regulation, the recent decline in live pig prices has slowed. In early February, the national average live pig ex-farm price fell by a cumulative 1.1%, with the decline narrowing by 8 percentage points compared with early January.
However, the National Development and Reform Commission said that, judging from the current situation, live pig production capacity remains on the high side, the coming months are the off-season for consumption, and live pig prices are expected to run at a low level, with pressure for further declines.