The loss of the industry has increased, and the falling cycle of pig prices may be coming to an end

Citizens buy meat in a supermarket in Jinshui District, Zhengzhou City, Henan Province Photo by Xinhua News Agency reporter Zhang Haoran

On March 30, the main contract of hog futures 2205 on the Dalian Commodity Exchange closed at 12,895 points, down 21.

What is the current situation of pig supply? What is the profit and loss situation of the pig industry? When will the falling pig price cycle end? With these questions, the reporter interviewed relevant people in the industry

There is still a period of excess capacity

"At present, the production and supply of live pigs in the country are sufficient, but the demand is shrinking, and the periodic surplus is more obvious

From the perspective of production, according to the monitoring of the Ministry of Agriculture and Rural Affairs, in January this year, the number of live pigs sold nationwide increased by 23.

From the perspective of consumption, the seasonal decline of pork consumption and the impact of the new crown pneumonia epidemic, the pork consumption after the Spring Festival is obviously weak, the production and supply of live pigs are sufficient, but the demand is shrinking, and the periodic surplus is more obvious

Zhu Zengyong predicts that since March, the elimination of breeding sows across the country may increase, and the breeding sows will gradually decrease to a reasonable production capacity range in the second quarter

On March 22, the Ministry of Agriculture and Rural Affairs held a special department coordination meeting, requiring all localities to strengthen information monitoring and early warning of the entire pig industry chain, actively guide financial institutions to increase credit policy support, stabilize long-term support policies such as breeding land and environmental protection, and accurately implement live pigs.

Industry losses widen

In the early part of last week, the average wholesale price of white striped pigs in the Beijing market fell, and rebounded slightly in the later period

Last week, the average daily listing of white striped pigs in Beijing Xinfadi was 1,670.

"Because of the double squeeze of pig prices and rising production costs, the loss of breeding has increased

From the perspective of breeding costs, global soybean meal prices and corn prices remain high, driving up feed costs

However, due to the advantages of scale and technology, the production costs of leading enterprises in the industry are much lower

Yuan Hebin revealed that in the past two years, some of the company's outstanding subsidiaries and benchmark factories have achieved excellent breeding costs in batches or stages, and achieved a relatively ideal complete cost

Pig price decline gradually narrowed

"After June this year, the oversupply situation of commercial pigs is expected to ease, pork supply and demand will turn to a basic balance, and pig prices will rebound seasonally

The Ministry of Agriculture and Rural Affairs' monitoring data on bazaars and collection points in 500 counties showed that in the fourth week of March, the national average price of live pigs per kilogram was 12.

According to the calculation of production cost data in recent years, the price ratio of pig grain at the break-even point of live pig production is about 7:1

Zhu Zengyong told reporters that in the short term, the price of pigs is expected to stop falling and stabilize, and the price of pigs in some areas, such as the Northeast, has rebounded slightly
.
Recently, due to the prevention and control of the new crown pneumonia epidemic, roads in some areas are not smooth, and the slaughtering of live pigs in some areas has been hindered.
In addition, the breeding side has suffered serious losses in slaughtering, and farmers are more willing to sell at high prices.
The enthusiasm for slaughtering pigs is not high, and the difficulty of purchasing slaughtering enterprises has increased.
The market waits and sees , Bullish sentiment increased
.
The gradual reversal of the market supply and demand situation is expected to drive the national pig price to stop falling
.
However, due to the impact on consumption, especially out-of-home consumption, it is difficult for the consumer side to support the continued rebound in pig prices, and pig prices are expected to stabilize at a low level in general
.
With the improvement of the prevention and control of the new crown pneumonia epidemic, pigs will be slaughtered or concentrated in the later stage, and the price of pigs will still face certain downward pressure
.
The current pig price is lower than the same period in 2019, but higher than the same period in 2018.
It is expected that there will be little room for decline in the later period
.
At the end of the second quarter, affected by the month-on-month decline in the supply of piglets at the beginning of the year, the oversupply of commercial pigs is expected to ease after June, the supply and demand of pork will turn to a basic balance, and the price of pigs will rebound seasonally.
Up and down
.

Since June 2003, the price fluctuation of live pigs in China has gone through 4 complete cycles
.
The durations of these 4 full cycles are 36 months, 36 months, 59 months and 49 months, and each full cycle includes a rising phase and a falling phase
.
The 5th cycle that is currently running has been in an upward channel for 27 months from June 2018 to the end of August 2020, and has been in a downward channel for a total of 19 months since September 2020, with a total of 46 months.
The time span is relatively close to the previous cycle
.
This indicates that the decline may be coming to an end
.

The severe winter will eventually pass, and the pig breeding industry should strengthen its confidence, speed up the elimination of outdated production capacity, and speed up industrial upgrading to meet the arrival of a new round of rising cycle
.

Yuan Hebin told reporters that Muyuan's key work this year is still to focus on the continuous reduction of complete production costs
.
In terms of specific means, the company will further promote the coverage and application of intelligent aquaculture through various methods such as continuous management optimization, intelligent innovation and application, and personnel ability improvement, starting from the details of each production link, and reduce the difference between different subsidiaries and different factories.
cost dispersion
.
Reduce costs from details, seek efficiency from innovation, and improve the company's overall anti-risk and cross-cycle stable development capabilities through cost reduction
.