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Original Title: Live Pig Supply Gradually Resumes Industry Profitability Logic Shift
At present, the recovery of live pig production in China is accelerating. According to data from the Ministry of Agriculture and Rural Affairs, without further spread of the epidemic, the live pig population will be restored to about 80% of the level of 2018 to the end of the third quarter of 2020. Due to the continued recovery and growth of live pig populations, the live pig market in the fourth quarter showed a trend of better supply and fluctuating prices. From the end of October to the beginning of November, the price of pigs is likely to be in the range of 26-30 yuan / kg, from mid to late November. Starting in December, a gradual rebound is necessary. After the rebound, the price of pigs has fallen again. Pig production capacity will be fully restored in the second quarter of next year, and the price of pigs will be required to fall further.
At the press conference of the State Council Information Office on October 27, Liu Huanxin, Vice Minister of the Ministry of Agriculture and Rural Affairs, stated at the press conference that the current livestock industry is accelerating the upgrade. The pig rearing rate has exceeded half, reaching 53%. The recovery of pig production is better than expected. Wei Baigang, chief economist at the Ministry of Agriculture and Rural Affairs, said that the pork supply situation will improve more and more in the coming period. Wei Baigang said that during the two main New Year holidays and the Spring Festival next year, the supply of pork will increase by about 30% year on year. After the increase in volume, the price will generally be lower than in the same period last year and there will be no significant price increase. In the later stage, as the number of breeding sows increases, the number of pigs in the population increases, and the number of slaughter will also increase rapidly. Once supply increases, prices will gradually return to normal levels.
According to data from Zhuo Chuang Information, after entering October, the live pig market showed rapid decline. Simultaneously,corn、Soybean flourRising prices for feed ingredients, such as bran and other feed raw materials, have had a double negative effect on profits from pig farming. According to Zhuo Chuang’s tracking, the profit from pig farming in October was the first year-on-year decline since March 2019, the first time in 20 months.
According to a Northeast Securities research report on Oct. 26, live pig production will take time to recover and higher profits can still be expected. Although the stock of breeding sows is recovering, considering that the proportion of ternary sows reaches 40%, the efficiency of the sow herd has decreased and the growth of the real production capacity will be reduced considerably. The price of pigs is expected to remain within a good profitability range. And the profit period is longer than before. The volume of listed companies next year will continue to increase significantly from year to year, with a large increase in volume and a small drop in prices. The performance of the breeding companies in 2021 is still worth waiting for. According to pig sales for September and the forecasts of the first three quarters of the listed pig companies, the number of pigs sold by the nine listed pig companies in the first three quarters of 2020 will reach 28,866,700, which represents 7 98% of the country’s pork sales.
According to the analysis of Xiong Kuan, senior researcher at COFCO Futures, the price of the different herds of pigs will show different volatility, especially the price of the intermediate products-piglets, due to the state of supply and demand of the different herds of pigs. pigs and market participants sentiment over the cycle. There is an amplification effect.
After Spring Festival 2020, overbought in restocking demand has led to an increase in the price of piglets. Based on the expectation of future piglet profits and the piglet / completion ratio, the advance piglet sales have blocked piglets caused by the gradual shortage of supply and demand. Shortage income. In August-September, the supply of piglets remained scarce, pig farms maintained their own fattening and switched to secondary fattening pig sales or large pig sales, to avoid progressive overselling of piglets and maximize profits.
In the future, there are still profit-making opportunities between breeds in the live pig market, because the current chain price fluctuations of different herds of pigs still do not coincide, and the inconsistency of the scarcity attributes of different groups will provide a better profit-making scenario.
In the short term, China’s live pig market prices remain weak and the cost of replenishing piglets in the early stage is high, combined with the recent increase in prices of feed raw materials. They have repeatedly raised prices to increase the cost of feed for pig farming, and the profits from pig farming continue to decline. Overall, there is still plenty of room for feed ingredient growth in the market outlook, and farmers may face double pressure from a further increase in feed ingredient prices and declining prices for pigs. alive in the later stage.
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