Can the price of pigs rise under the multi-party good? Industry: the current price of pigs is still difficult to say the bottom.....

     With the gradual recovery of pig production capacity, pork prices have fallen all the way this year, with prices now down 60% from their highs. This also brings great pressure to pig enterprises, and the pig industry is generally losing money. From the point of view of listed pig enterprises, the performance of all the first half of the year declined compared with the same period last year, and the major pig farmers, except for the shares of "pig Mao" muyuan, all recorded losses to varying degrees. And pork stock prices are also all the way down, down more than 70%.

The analysis believes that the second half of the pig enterprises out of the column or will continue to increase, and the normalization of epidemic prevention under the background of consumption is still uncertain, the industry pattern is difficult to change.

01 Pig production capacity resumed half a year ahead of schedule, but pig prices began to turn down half a year ahead of schedule.

In the second half of 2018, with the spread of African swine fever, a super pig cycle started. According to data from China Pig Raising Network, the price of live pigs (external three yuan) has gone up since bottoming out in early 2019, from around 11 yuan/kg to a high of 41 yuan/kg at the end of the year. During the period, a series of policies to promote the recovery of pig production capacity and market supply were introduced intensively, pig production capacity gradually recovered, and pig prices subsequently maintained a high volatility pattern in 2020.

Entering 2021, pig production capacity will be further restored. Ma Youxiang said at a press conference on September 1 that the current pig production capacity has been fully restored. At the end of July, the national breeding sows and pig stocks will be restored to 101.6 and 100.2 respectively at the end of 2017.%, to achieve the recovery target half a year ahead of schedule.

Unlike pig production capacity, pig prices have been declining since the beginning of this year. According to statistics from the Ministry of Agriculture and Rural Affairs, the number of live pigs in the first half of this year increased by 34% year-on-year. At the end of the first half of the year, the number of fixed-point monitoring sows increased by 30% year-on-year, and the number of live pigs increased by 29% year-on-year. Increased supply pushed prices down sharply, with hog prices falling from a high of $36/kg at the beginning of the year all the way down to $12/kg at **in June, a drop of more than 60%, once falling back to the low levels seen before the start of the current pig cycle in March 2019. Pig prices rebounded briefly in July, but soon returned to decline. By September 2 * * the new offer was 14.18 yuan/kg.

The National Development and Reform Commission's Price Monitoring Center pointed out that in the fourth week of August, the national pig price ratio was 4.74, down 1.46 percent from the previous month. According to the current price and cost, the future loss of pig breeding head is 611.49 yuan. In the fourth week of August, domestic pig prices showed a volatile downward trend.

02 Pig prices are still in a downward cycle

"Since August, pork prices have once again entered a volatile downward range." Liu Tong, manager of the statistics department of Beijing Xinfadi Agricultural Products Wholesale Market, said.

On August 27, the average wholesale price of white striped pigs in Beijing Xinfadi was 17 yuan/kg, down 2.86 percent from 17.5 yuan/kg on August 13 and 9.33 percent from 18.75 yuan/kg on July 20.

**Recently, the price of pork in the Beijing market has changed-the average wholesale price jumped from 17.25 yuan/kg on August 15 to 20 yuan/kg on August 16, and the price has risen by 15.94 in just one day.

The reason is that in the downward process of meat prices, slaughterhouses compete with each other, making meat prices continue to decline. As a result, the slaughterhouse reduced its price, resulting in a shortage of daytime supply.

Liu Tong said that this price increase does not have a trend. From the recent overall performance of pork prices, the volatility is trending downward. However, the decline in pork prices is not entirely due to overcapacity. At present, pig production capacity has returned to the level of the same period of the year, but demand has not yet fully recovered. If demand continues to recover after September, there is limited room for meat prices to continue to fall.

Zhu Zengyong told reporters that it is too early to talk about the rising cycle. Since June 2003, China's pig price fluctuations have gone through four complete cycles, each cycle is as long as several years. According to the law, before the peak consumption season, pig prices usually have a round of seasonal rebound. However, the current backlog of imported frozen pork in the market is not small, which will restrain the rise of pig prices to a certain extent, and the rebound of pig prices will not be too high. According to the overall judgment, pig prices will be in a downward channel in the general trend in the coming year, but prices may still rebound at consumption nodes such as New Year's Day and Spring Festival.

03 Phased profit growth factors increase, but pig prices are still hard to bottom out.

A few days ago, the National Development and Reform Commission announced that the price of live pigs has been running at a low level recently, and the price ratio of pig and grain is between 5:1-6:1, which is in the secondary warning range of excessive decline. In accordance with the provisions of the "Plan for Improving the Government's Pork Reserve Regulation Mechanism to Ensure Supply and Price Stability in the Pork Market", the National Development and Reform Commission, the Ministry of Finance, and the Ministry of Commerce will work with the Ministry of Agriculture and Rural Affairs, the General Administration of Market Supervision and other relevant departments to once again start the central pork reserve collection and storage work during the year, and will supervise and guide all localities to increase their efforts to carry out local pork reserve collection and storage in a timely.

By the collection and storage policy superimposed on the consumption of positive boost, the recent market probability of easy to rise and fall trend mainly, but by the industry production capacity recovery, sufficient pork inventory, breeding end of the rise of the column sentiment and other factors, most analysis of the market is still pessimistic.

Air China Securities believes that the African swine fever epidemic repeatedly and the national phase of the introduction of the storage plan on the overall supply and demand impact is limited, the current can breed sow stock is still at a high level, pork supply will be inertia to maintain a high level, while the demand side of the follow-up is difficult to see a significant rise, the current pig prices are still difficult to say the bottom. But it believes that in the short term, with the beginning of the school season, the arrival of the end of the stock season, the demand side is expected to marginal improvement, while the policy side will be implemented to alleviate the cyclical fluctuations of pigs, showing that the government's concern about the general loss of the industry, the short-term pig market will have some support.

CICC said that the number of pig companies may continue to increase, while frozen pork stocks are relatively sufficient. In the context of the increase in supply probability, the recovery of the demand side directly affects the price trend. Although the fourth quarter is the peak season for pig consumption, there is still great uncertainty on the demand side. It is expected that the average price of pig in stock in China will exceed 20 yuan/kg by the end of the year. "In view of the price difference between the north and the south, we will reduce the average price of live pigs in the fourth quarter from 23 yuan/kg to 19 yuan/kg".

Dongxing Securities said that the second half of the pig market supply is still showing a sustained recovery trend, it is recommended to continue to pay attention to farmers pressure column out of the column sentiment and end consumer demand improvement. At the enterprise level, cost reduction and efficiency is still the core theme, and corporate profitability is expected to be repaired in the second half of the year as costs go down.