After the Spring Festival in 2022, the price of live pigs fell below 13 yuan / kg again and hovered at the bottom for many days.
In mid February, Wang Zuli, chief expert of pig industry monitoring and early warning of the Ministry of agriculture and rural areas, told the media that in the near future, farmers will lose more than 300 yuan for every commercial pig they sell.
Wan Xiaoquan, researcher of Shenzhen Agricultural Products Group Co.Ltd(000061) Zhejiang merchants Futures Research Center, told the 21st Century Business Herald reporter that due to the rise of feed costs and the decline of pig prices, the recent breeding profit loss has increased significantly. At present, farmers' self breeding and self breeding loss is 300-400 yuan / head, with an average loss of about 3 yuan / kg. Due to the low price of piglets in the early stage, the current loss situation is relatively better.
On February 22, the opinions of the CPC Central Committee and the State Council on doing a good job in the key work of comprehensively promoting rural revitalization in 2022 was issued, proposing long-term support policies to stabilize pig production, stabilize basic production capacity and prevent production from ups and downs.
"This is a programmatic document. With the programmatic document, we can also see that policies have been introduced in succession in the past two years, including pig early warning mechanism, collection and storage mechanism, etc. I think the corresponding policies will continue, with the purpose of ensuring price and stable supply." Wei Xin, a researcher of China Securities Co.Ltd(601066) futures Shenzhen Agricultural Products Group Co.Ltd(000061) business department, told the 21st Century Business Herald.
experts predict that there is limited downward space
After the Spring Festival, pig prices "hit the bottom" again.
According to the data of China pig breeding network, live pigs (external three yuan) fell below 13 yuan / kg on February 13 and fluctuated around 12.3 yuan - 13 yuan for many days.
According to the data of the Ministry of agriculture and rural areas, as of 14:00 on February 23, the average price of pork in the national Shenzhen Agricultural Products Group Co.Ltd(000061) wholesale market was 18.96 yuan / kg. On February 7, the average price of pork in the national Shenzhen Agricultural Products Group Co.Ltd(000061) wholesale market was 22.38 yuan / kg, and the price of pork fell 15% in half a month.
"The consumption after the festival is in the traditional off-season, the delivery of white striped meat is not smooth, the slaughter remains low, and the supply side is in a state of surplus. The breeding group enterprises actively sell as planned, and the supply of pigs is sufficient, which has led to the rapid weakening of prices in the near future." Wan Xiaoquan said.
However, at present, the downward momentum of pigs is not strong.
Wei Xin pointed out that now the price of pigs is relatively low. In the future, the price of pigs may fluctuate at a low level, and there will not be much downward space. "The bottom may be in March, and then a rebound may occur."
At the same time, pig prices may usher in a new round of policy "bottom support".
The National Grain Reform Commission released the news that the average daily price of pigs fell by 2.57 in May, which was called the second level of the National Grain Reform Commission. The national development and Reform Commission will work with relevant departments to start the collection and storage of pork reserves as appropriate, and guide local governments to carry out the collection and storage according to regulations.
According to the regulations, when the specific price of pig grain is lower than 5:1, a first-class early warning will be issued.
"According to the corn price of 2.7-2.8 yuan / kg, the pig food price ratio is 5:1, and the pig price is more than 13 yuan per kilogram. Now the pig price has fallen below 13 yuan and has been maintained for some time. The first level early warning should be triggered, and we can pay close attention to the pig food price ratio data released by the national development and Reform Commission this week." Wei Xin pointed out.
At present, many provinces have issued a level-1 early warning.
For example, on February 16, Shaanxi said that the pig grain price ratio was 4.70:1, which entered the first level early warning range of excessive decline for two consecutive weeks, and the collection and storage of pork reserves will be started as appropriate.
In addition, according to the monitoring of Jilin provincial price monitoring center, as of February 16, the specific price of pig grain in Jilin Province was 4.90:1, entering the level-1 early warning range of excessive decline. On February 18, Shanxi announced that from February 14 to 18, the average pig grain price ratio of the whole province was 4.74:1, entering the level I early warning range of excessive decline.
"From the current price point of view, the first level warning of excessive decline has been triggered, so the expectation of the start of national collection and storage is undoubtedly enhanced." Wan Xiaoquan said.
She further pointed out that the impact of collection, disposal and storage on pork supply and demand is limited, mainly through the guidance of market sentiment to stabilize the excessive fluctuation of prices. Under the trend of weak prices, the purchase and storage will guide the improvement of market sentiment and affect the adjustment of market supply and demand, so as to play a supporting role.
farmers under pressure
Falling pig prices put pressure on farmers.
On February 20, Huachuang securities released a research report that in the week of February 14, the breeding loss increased, including the breeding profit of self bred pigs of -495.14 yuan / head.
"The modes of pig breeding enterprises are different, some are self breeding, some are outsourcing piglets, some have high breeding efficiency and some are low, so the cost gap is obvious. For some enterprises with low breeding efficiency, the cost may reach 17-18 yuan / kg, and for enterprises with good breeding cost control, the cost can be 14.5-15 yuan / kg." Wei Xin pointed out, "from the current situation, the average loss of the whole industry is about 3 yuan per kilogram."
He further pointed out that the biggest problem for farmers now is cash flow. "As the overall loss of the pig breeding industry has lasted for about 9 months, the cash flow of many enterprises is under pressure."
This makes "de capacity" the "main theme" of the pig breeding industry in recent months. However, at present, the capacity of pig farmers is "uneven".
On February 21, green Dahua futures released a special report saying that from February 14 to 18, the futures researcher went to Henan to investigate the de capacity of pigs and found that the new farmers attracted by the current round of breeding dividends have basically completed the de capacity. In addition, some professional farmers left the farm passively due to repeated classical swine fever.
Wan Xiaoquan pointed out that the cost of pig breeding for retail investors is mainly feed, and the feed purchase can adopt the mode of credit sale, that is, the feed cost can be settled after selling pigs, so the low short-term price has no obvious impact on the exit of retail investors.
"From July to September 2021, the pig breeding industry quickly lost production capacity. Now it is time to test the funds of breeding enterprises. If enterprises have funds, they feel that the pig price may rebound in the second half of the year, so they will even choose to supplement some production capacity at this time. Farmers who lack funds can only passively lose production capacity." Wei Xin pointed out.
At present, the market generally judges that the pig price is expected to rebound in the second half of the year, and a new round of "pig cycle" may come.
Wan Xiaoquan said that the pig price may pick up in the fourth quarter, but because the overall pig supply will remain high, there will not be much room for price increase in the upstream, and the price of next year may need to be seen according to the de capacity in the first half of this year.
With the "admission" of more large farmers, the new round of "pig cycle" may not have a very obvious sharp rise and fall as this round of pig cycle.
Wan Xiaoquan believes that the pig cycle is mainly driven by breeding profits, showing periodic changes in prices, in which the low industrial concentration is the basis, the pig breeding and growth cycle is the root cause, and events such as epidemic diseases are the driving force. In the future, with the gradual withdrawal of retail investors and the admission of large investors, the industrial concentration will be further improved. Large-scale, professional and scientific breeding will make the supply of pigs more rational, which will stabilize the pig cycle to a great extent.
