The peak consumption season of the Spring Festival is approaching, and the price of pigs does not rise but falls. According to data from the Ministry of Agriculture and Rural Affairs, on January 13, the average price of pork in the national agricultural product wholesale market was 23.12 yuan/kg, a drop of 11% from 26.01 yuan/kg at the beginning of the month (quoted on January 3). According to the monitoring data of Zhuo Chuang Information , as of January 10, the national average price of live pigs has dropped to the lowest point since June, a drop of 45.09% from the annual price high; the national monthly average price of live pigs in January was 14.99 yuan /kg, down 20.73% month-on-month.
In the futures market, the LH2303 contract, the main force of hog futures, has fallen by more than 8% since January. The lowest price on January 12 was 14,735 yuan/ton, the lowest price since April 2022.
As the price of pigs continues to drop, the National Development and Reform Commission took action. On January 14, the official WeChat account of the National Development and Reform Commission issued a document advising slaughtering companies to appropriately increase commercial inventory, boost market demand, and promote the price of live pigs to rise to a reasonable range as soon as possible.
The reporter learned from various interviews that the demand in some markets increased significantly in the first ten days of January, but the supply of live pigs is still sufficient due to the centralized slaughter before the festival and the second fattening behavior of retail investors before the festival, and the increase in demand is difficult to support the increase in supply, which leads to fluctuations in pig prices fall.
Why is the price of pigs “not busy in peak season”
Since the first half of 2023, pork prices have fallen by more than 10%. According to the monitoring of the National Development and Reform Commission, from January 3rd to 6th, the national average price ratio of pigs and grains was 5.93:1. early warning interval.
As the peak consumption season of the Spring Festival approaches, the price of pigs has continued to fall instead. In this regard, Huang Yuping, a senior analyst at Orient Securities Futures, said that since December, group companies have generally accelerated weight reduction and slaughter, and the market has formed a certain stampede. With the increase in volume of the group, retail investors also accelerated the progress of slaughtering, so that the spot price from the end of December to the first ten days of January still showed the characteristics of a certain peak season.
According to the monitoring of Zhuo Chuang Information, the slaughter volume of national representative hog slaughtering enterprises in January continued the trend of continuous increase in December. As the supply continued to increase, the demand in some markets also increased significantly. Although pickling in some markets is about to end, pre-holiday stocking has been boosted, and the enthusiasm for downstream stocking has increased, forming a certain support for the live pig market. As of January 10, the monthly average daily slaughter volume in January was 226,700 head, a month-on-month increase of 23.95%. The daily slaughter volume of the national representative pig slaughtering enterprises was 247,500 head, or at the highest level in the year. However, the increase in demand was difficult to support the increase in supply, which led to a drop in pig prices at the beginning of the month.
On January 14, the National Development and Reform Commission issued a document stating that in view of the recent low price of live pigs, the Price Department of the National Development and Reform Commission organized some large-scale live pig slaughtering companies to hold a meeting to analyze the supply, demand and price situation of the live pig market in depth, and suggested that slaughtering companies appropriately increase commercial inventory , Boost market demand, and promote the price of live pigs to rise back to a reasonable range as soon as possible.
According to the analysis of participating companies, due to factors such as weaker pork consumption than in previous years and a periodic increase in live pig supply, the price of live pigs fell rapidly in the early stage; pork consumption has recovered recently, and the demand for slaughter has increased significantly; it is expected that with the further recovery of market consumption , The price of live pigs is expected to gradually rise to a reasonable range. The enterprises participating in the meeting said that the current pork inventory is generally at a low level, and they will study how to increase the purchase and storage in a timely manner, and appropriately increase the slaughtering volume and commercial inventory.
How is the market outlook?
The National Development and Reform Commission has monitored that the pig-to-grain ratio has entered the three-level warning range for excessive decline. If necessary, it may take measures such as purchasing and stockpiling to maintain the order of the live pig market, which will boost market sentiment to a certain extent. Under the game of supply and demand, how will the price of pigs go next?
In the view of Huang Yuping, a senior analyst at Orient Securities Futures, the current acceleration of slaughtering is a historical legacy caused by speculative slaughtering and secondary fattening in 2022. In the first quarter of 2023, the spot price will most likely remain weak, and the rebound momentum insufficient.
Zhuo Chuang Information analyst Shao Jianzhuo analyzed to the reporter that due to the panic of the market outlook at the breeding end, the phenomenon of “stomping” in some markets, and considering that there will still be centralized slaughtering and pre-holiday clearing behavior in January, although the holiday in the second half of the year caused a periodical The supply is reduced, and the actual slaughter volume may still increase. With the arrival of the peak stocking period before the Spring Festival, the sales volume may rise to the highest level in the year, but the demand after the holiday has been consumed in advance, and the sales volume may show a cliff-like decline. Therefore, under the double increase of supply and demand, it is expected that the national average price of live pigs may bottom out in the middle and late January, but it may end with a decline at the end of the month.
Regarding the market outlook for pig prices, Soochow Futures believes that in the short term, the pressure on large pig stocks still needs time to release, and after the Spring Festival will enter the off-season of demand, pig prices may continue to fluctuate at low levels in the short term. In the long run, although the number of slaughtered pigs in the first half of this year showed a slow upward trend, the overall still corresponds to a relatively low point in the number of sows on hand. If the weight of slaughtered pigs can be reduced to a low level in the later period, then the supply increase in the next year, especially in the second quarter It is relatively limited. After the impact of the superimposed epidemic subsides, demand is expected to recover, and there is also an expectation of a rebound in long-term pig prices.
This article comes from the WeChat public account “Economic Observation Network” (ID: eeojjgcw) , author: Chen Shan, 36 Krypton is authorized to publish.
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- The National Development and Reform Commission holds a special meeting on ensuring supply and stabilizing prices in the pig market2022-07-04
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