Since 2002, China has experienced five pig cycles, each lasting for 3-4 years. At present, it is in the downward stage of the fifth cycle. What enlightenment does the law of the past few rounds of pig cycle have for the second bottom of this round of pig cycle?
before the rise of each cycle, the pig price mostly presents a W-shape at the bottom
According to Sealand Securities Co.Ltd(000750) , the pig cycle from 2002 to 2006 has an upward cycle from July 2002 to August 2004 and a downward cycle from September 2004 to July 2006; For the cycle from 2006 to 2009, the uplink cycle is from August 2006 to March 2008 and the downlink cycle is from April 2008 to May 2009.
The data show that the observation has been carried out since July 29, 2008. The national average price of pork hit the bottom in June 2009, which was 15.35 yuan / kg. It hit the bottom twice in June 2010, which was 15.89 yuan / kg. After that, it started a new rising market.
After reaching the highest point of this cycle of 30.39 yuan / kg in mid September 2011, it began to fluctuate and decline, and reached the lowest point of 19.25 yuan / kg in late April 2014. After a short rise, it reached the bottom of 21.23 yuan / kg in March 2015. The market price trend of domestic pigs (external three yuan) is basically the same. The price of domestic pigs (external three yuan) also reached the lowest point of this cycle in late April 2014, which was 10.5 yuan / kg, and reached the bottom for the second time in March 2015, which was 11.5 yuan / kg.
By June 2016, after reaching the highest point of 31.56 yuan / kg in this cycle, it began to fluctuate and decline. By may 2018, it reached the lowest point of 19.22 yuan / kg. The market price of live pigs (external three yuan) also began to decline after reaching the highest point of 21.1 yuan / kg at the end of May 2016, and reached the lowest point of 9.9 yuan / kg in early May 2018. After that, it rose slightly and then fell again. By February 2019, After the completion of the second bottom, it rose all the way and the pig price fluctuated at a high level.
The downward trend of this cycle began in January 2021. The national average price of pork continued to decline from 54.22 yuan / kg, fluctuated slightly in July, and then continued to decline. It fell to 21.03 yuan / kg in mid October, then rose for nearly two months, and began to decline again in early December to 28.91 yuan / kg. The market price of live pigs (external three yuan) also decreased from 36.8 yuan / kg in January last year to the lowest point of 10.5 yuan / kg in early October, and began to decline after 18.2 yuan / kg in late November. According to the latest data released by the National Bureau of statistics, the price of live pigs (foreign three yuan) in late January 2022 was 13.8 yuan / kg.
Pork prices are mainly driven by internal factors of cyclical supply and demand, but these pig cycles have also superimposed external factors, increasing the amplitude of the cycle, such as African swine fever, environmental protection ban and so on.
Through the above analysis, we can find some laws: the cycle duration generally lasts for 3-4 years, and April May is the off-season time node, which is often the end node of the pig cycle. During the period of observation, before the rise of each cycle, the pig price showed a W-shape at the bottom, that is, there will be a second bottom. The interval between the second bottom and the first bottom is about 8-11 months. There is a certain increase in the price in the second time compared with the first time. Combined with the cycles over the years, the bottom of the cycle often occurs near the second quarter.
when will the pig price bottom in this cycle
Zhou Xiaoqiu, chief researcher of Guotai Junan Securities Co.Ltd(601211) Industrial Service Research Institute, said in an interview with surging news reporters that with the rise of pig prices in October last year, some views of the market believe that the later production capacity is released in advance and the pig production capacity is now reduced, but in fact, it is due to the advance of consumption and the backward shift of supply. There are also views that pigs that should have been released in February and March will be pressed back and will not be released for the time being. But why is the collection and storage often in the period from March to June? It is because this time is the season with the weakest consumption in the whole year. Therefore, unless we are very optimistic about the price expectation in the future, it is unlikely that we will not be able to press the column now.
“By calculating the total supply, we believe that the bottom of the price may be in the third quarter of 2022.” Zhou Xiaoqiu said.
He pointed out that the market believes that the core reason for the price meeting at the end of the second quarter is that the production capacity peaked in June and July 2021. “However, we believe that the peak of production capacity in the whole market is in September 2021. The decline of production capacity to a real reversal of supply and demand in the whole market should be after the third quarter of this year.”
Zhou Xiaoqiu said that before the third quarter, the supply of the whole market was relatively loose. In the environment of loose supply, if the column is pressed, it may be beneficial in the short term, but the risk is relatively large if the trend is prolonged to two or three months.
Southwest Securities Co.Ltd(600369) Xu Qing, chief analyst of agriculture, forestry, animal husbandry and fishery team, previously told surging news reporters that the high pig price from October to December 2021 led to the phased slowdown of the industry’s capacity removal behavior. After that, the pig price probably had to bottom twice and fall below the average cost of the industry before it could lead to further capacity removal of the industry and accelerate the reversal of the industry. According to his prediction, the reversal point of pig price may appear between the fourth quarter of this year and the first quarter of next year. The specific time point depends on the rhythm of capacity removal of the industry.
Sealand Securities Co.Ltd(000750) pointed out that the inventory determines the trend of the pig cycle, and there is a bottom shock in the downward cycle. It is expected that the pig price will improve in the second half of 2022. The second bottom of pig price in this cycle is expected to be between June and August 2022, and the second bottom of pig price is expected to be about 11-12 yuan.
