Recently, several listed pig breeding companies released sales data for December 2021 and the whole year. On the whole, the number of pigs sold by all companies increased significantly in 2021. However, due to the significant reduction of the average selling price of pigs, the growth of sales revenue was relatively low, and some companies even decreased.
On January 5, Muyuan Foods Co.Ltd(002714) released the sales data for December 2021. In December 2021, Muyuan Foods Co.Ltd(002714) sold 5.025 million pigs (including 37000 piglets), with a sales revenue of 7.765 billion yuan. In 2021, Muyuan Foods Co.Ltd(002714) sold a total of 40.263 million pigs, with a sales revenue of 75.09 billion yuan, an increase of 122.25% and 36.37% respectively year-on-year.
It was announced on January 5 that 1227000 pigs were sold in December 2021, with an income of 2.291 billion yuan. In 2021, the company sold 13.2174 million pigs, with an income of 27.142 billion yuan. The average selling price of hairy pigs was 17.39 yuan / kg, with year-on-year changes of 38.47%, – 31.86% and – 48.18% respectively.
Shenzhen Kingsino Technology Co.Ltd(002548) it was announced on January 5 that in 2021, the company had sold 1.0689 million pigs, with a cumulative sales revenue of 2.037 billion yuan, an increase of 33.01% and – 5.26% respectively over the same period last year.
Beijing Dabeinong Technology Group Co.Ltd(002385) it was also announced on January 4 that in December 2021, the company sold 453500 pigs with a sales revenue of 797 million yuan. In 2021, a total of 4.0378 million pigs were sold, a year-on-year increase of 132.8%; The cumulative sales revenue was 8.706 billion yuan, a year-on-year increase of 23.89%.
It was announced on January 3 that in December 2021, the company sold 416900 pigs, with a month on month increase of 1.55% and a year-on-year increase of 87.62%. In 2021, a total of 3.2459 million pigs were sold, with a year-on-year increase of 141.10%.
Looking back on 2021, China’s pig market can be described as ups and downs, with many hot spots: the decline of pig prices against high costs, the deep loss of pig breeding, the start of National Pork collection and storage, the establishment of pig price early warning mechanism, the listing of pig futures to help the operation and development of industrial enterprises
After falling to the altar in 2021, can pigs “breathe” in 2022? What variables will the development of pig industry face? How will pig futures play a role in helping industrial enterprises develop smoothly and stabilize the pig cycle? In 2022, the development of pig industry is still full of expectations.
inventory of seven hot spots in the pig market in 2021
In the bulk commodity market last year, the futures “new star” pig ranked first in the decline list with a decline of more than 50% in the whole year. At the same time, the spot price of pig also fell by 70%, once becoming the most popular variety in Shenzhen Agricultural Products Group Co.Ltd(000061) . The reporter combed the seven hot spots of the pig market in 2021 as follows:
Hot spot 1: pig prices fluctuate sharply
Throughout 2021, with the rapid release of pig production capacity, the spot price of pigs fell all the way, finally stopped in mid October and rebounded strongly in a month and a half. It is understood that at the beginning of last year, China’s pig price was generally above 35 yuan / kg, and fell to around 10 yuan / kg by the end of the third quarter, with a decline of as much as 70%; After entering October, pig prices rebounded sharply. By late November, pig prices rebounded by about 70% compared with the low at the end of September.
Hot spot 2: pig breeding falls below the cost line
Under the situation that the pig price fell sharply and the feed cost remained high, the profit of pig breeding was squeezed last year, from “unprecedented” in 2019-2020 to the overall loss last year. Especially in the third quarter of last year, the industry fell into deep losses. Some farmers with high cost of picking piglets at the beginning of the year even lost more than 2000 yuan / head.
In terms of the operation of listed pig enterprises, in the first half of last year, the profits of most pig enterprises decreased significantly year-on-year, and “Zhumao” Muyuan Foods Co.Ltd(002714) stood out with a profit of nearly 10 billion yuan. In the second half of last year, with the sharp decline of pig prices, listed pig enterprises suffered large losses, Muyuan Foods Co.Ltd(002714) also suffered losses in the third quarter, and several listed companies suffered losses of billions of yuan in a single quarter in the third quarter, with a total loss of more than 20 billion yuan. However, from the perspective of the whole year, due to the high profit of pig breeding in the first quarter and the rebound of pig price in the fourth quarter, the profit of pig breeding basically or reached breakeven.
Hot spot 3: rapid recovery of pig production capacity
At the beginning of 2021, the market overestimated the impact on the northern swine fever epidemic, and the actual recovery rate of pig production capacity exceeded expectations, resulting in the market’s misjudgment of the price in the second quarter. The data show that by the end of June 2021, China’s fertile sows have recovered to a phased high, reaching the level of 45.64 million, an increase of 26% year-on-year, which is also significantly higher than the level of 44.72 million before non plague, that is, at the end of 2017. After July, the effect of breeding loss on capacity reduction appeared. The number of fertile sows decreased continuously, but remained at a high level of 42.96 million by the end of November, 4.7% higher than the official estimated number of fertile sows in the equilibrium state.
Hot spot 4: national collection and storage “supporting the market” to promote stable supply and price
In 2021, relevant government departments successively issued documents such as the plan for improving the regulation mechanism of government pork reserves and ensuring supply and price stability in the pork market, the implementation plan for regulation and control of pig production capacity (Provisional), formulated an early warning mechanism and corresponding early warning range for excessive rise and fall of pig prices, and defined indicators such as the normal number of fertile sows in the country, The purpose is to stabilize the disturbance of “pig cycle” on pig price, reduce the fluctuation range of pig price, avoid the phenomenon of “high price hurts people and low price hurts farmers”, and consolidate the results of capacity recovery.
After entering July, the Ministry of Commerce, together with relevant departments, successively launched four times of pork purchase and storage, which boosted the confidence of the pig market. The month on month decline in pig prices also narrowed significantly compared with previous months after July, and the excessive decline in pig prices was curbed.
Hot spot 5: release of pig “prohibition order” in the eastern region
Since April 1, 2021, China has begun to gradually restrict pig transportation from pilot regions, and new regulations on pig transportation have been launched all over the country. In early December, the six provinces in the eastern region issued new regulations on pig transportation. From December 1, 2021, they will no longer accept more than 30kg pigs outside the eastern region for fattening in the eastern region, and will no longer accept pigs outside the eastern region that have not been recorded for “point-to-point” transportation for slaughter in the eastern region. The release of the new regulations is conducive to the prevention and control of classical swine fever in winter and to promoting the further transformation from “pig transfer” to “meat transfer” in the country.
Hot spot 6: Pig futures escort industrial operation after listing
Since the pig futures was listed on the big commercial exchange on January 8, 2021, the trading volume and position have been rising day by day. From late May 2021, the spot price of live pigs fluctuated greatly, which brought great operational risks to relevant enterprises. Relevant enterprises actively used futures tools to hedge risks, and their enthusiasm for participation increased rapidly. Lh2109 and lh2111 contracts have delivered 53 contracts, with a delivery amount of 13.33 million yuan. From the perspective of lh2201 contract, 430 warehouse receipts have been generated, and the delivery volume is expected to continue to increase.
By the end of November 2021, more than 10 listed companies had announced that they planned to use the futures market for auxiliary operation, more than 80 breeding enterprises had applied for hedging qualification, and more than 3000 unit customers had participated in pig futures trading.
Hot spot 7: regulators have repeatedly affirmed the function of pig futures
Since its listing last year, pig futures have also attracted the attention of regulators. Within less than one year of listing, regulators have publicly talked about the function of pig futures on the spot industry for many times.
At the “2021 China Fortune Forum” held on July 24, 2021, Fang Xinghai, vice chairman of the CSRC, said that pig futures provided a relatively reliable price signal for breeding enterprises to formulate business plans such as pig blocking and secondary fattening. In this round, the price of pigs decreased from 36000 yuan / ton at the beginning of the year to about 16000 yuan / ton at present, a decrease of 60%, Historically, this decline is relatively large, but this round of price decline does not have the phenomenon of killing sows in the previous pig cycle, which has played a good role in the protection of pig production capacity.
On December 5, at the 17th China (Shenzhen) International Futures conference in 2021, Fang Xinghai, vice chairman of China Securities Regulatory Commission, mentioned pig futures again. He said that since the listing of pig futures in early January 2021, by the end of September, 175 pig insurance and futures projects had been carried out in the whole futures industry, providing guarantee for 39000 tons of pigs, with a corresponding value of 1.02 billion yuan, in ensuring breeding profits Play an active role in stabilizing pig production capacity and ensuring the stability of important livelihood commodity prices. For nearly a year since the listing of pig futures, when the spot price was high in January, the futures price showed a discount, while when the spot price fell to the bottom in June and July, the futures price showed a premium, which provided good price guidance for production and consumption enterprises in the pig industry. It is worth looking forward to whether pig futures can help “iron” the pig cycle.
the pig market pattern has changed, and the industry has returned from Crazy expansion to “cost reduction and efficiency increase”
Since 2021, behind the sharp fluctuations in pig prices, China’s overall pig industry has also undergone many positive changes. Specifically, although there are sporadic outbreaks of African classical swine fever, it is generally controllable, the impact on the development of pig breeding industry is reduced, and the pig production capacity has been fully restored; In the post epidemic era, catering services have gradually normalized, terminal demand has increased significantly, and the rapid decline of pig prices has directly promoted the restorative growth of residents’ pork consumption; With the recovery of consumption, the number of designated pig slaughters in China has gradually climbed to a high level. In August 2021, the regulations on the administration of pig slaughtering were revised after 13 years to further promote the high-quality development of the pig slaughtering industry. In addition, in the case of large fluctuations in the profits of pig breeding throughout the year, pig enterprises have reduced costs and increased efficiency, the structure of sows has been continuously optimized, the production capacity of pigs has been moderately reduced, and the cost of the whole breeding industry has also decreased.
From the perspective of African swine fever, LV pin, a pig analyst at Everbright futures, told futures daily that after the baptism of African swine fever in recent two years, the epidemic prevention ability of Chinese pig breeding has made great progress. Although the short-term breeding cost has increased, in the long run, the survival rate of pig breeding and the ability to resist major epidemics, This has brought China’s pig breeding industry into a new stage.
From the perspective of industrial development, LV pin said that in recent years, during the period of African pig plague and production capacity recovery, the main factor determining the fluctuation of pig price is supply. With the complete recovery of pig production capacity, the focus of the market has gradually shifted from the supply side to the demand side since 2021, and the pig price has also returned to the normal fluctuation range. On the whole, the pig industry is returning to “normal” in 2021, and the proportion of dual sows is gradually increasing. After the ultra-high breeding profit disappears, the pig price center returns to near the breeding cost line, the market returns to the theme of cost control again, the pig industry also returns from Crazy expansion to cost reduction and efficiency increase, and a benign competitive state is forming within the industry.
From the perspective of industry breeding concentration, Zhang Xiaojun, corn pig analyst of green Dahua futures, said that in 2021, the breeding concentration of China’s pig industry increased significantly. On the basis of large-scale, leading enterprises arranged the integration of the whole industrial chain, leading breeding enterprises arranged the downstream slaughtering food processing links, and the slaughtering food processing leaders also arranged the breeding links accordingly.
“In 2021, the concentration of China’s pig market continued to increase, and the proportion of large pig raising groups in the slaughter volume increased rapidly. In the third quarter, the number of pigs sold by 12 major listed pig raising enterprises reached 24.32 million, accounting for 15.7% of the national slaughter volume of 154.51 million in the same period, compared with only 12.3% in the first quarter.” Guoxin futures Shenzhen Agricultural Products Group Co.Ltd(000061) analyst Qin duogui said.
According to LV pin’s prediction, the number of pigs to be sold in 2021 will reach 680 million. The five pig enterprises with the largest number of pigs will sell nearly 70 million pigs, more than 10% of the total.
At the same time, the development of China’s pig industry in 2021 still faces some problems. Zhang Xiaojun believes that on the one hand, whether the cash flow of industrial enterprises can persist until the next round of pig cycle starts; On the other hand is to reduce costs. On the premise of high feed prices, how to reduce costs is a magic weapon for enterprises to protect their lives.
In LV pin’s view, the development of China’s listed pig enterprises determines the process of large-scale pig breeding. Although China’s large-scale pig breeding has made great progress in recent years, there is still a certain gap compared with developed countries. Therefore, it is still very important to continue to deepen the process of large-scale pig breeding.
can this round of super long pig cycle end in 2022?
Looking forward to the pig market in 2022, Zhang Xiaojun told reporters that before and after the Spring Festival in 2022, factors such as the prevention and control situation of northern classical swine fever, the prevention and control situation of covid-19 epidemic situation, the implementation of the implementation plan for pig production capacity regulation, the speed of eliminating the production capacity of fertile sows, the rhythm and scale of central reserve meat collection and storage, and the implementation of pig transportation policies in various regions deserve continuous attention.
Talking about how long this round of pig cycle will last, LV pin said that according to the implementation plan for pig production capacity regulation (Provisional) issued by the Ministry of agriculture and rural areas on September 23, 2021, the normal number of fertile sows during the 14th Five Year Plan period is stable at about 41 million. At present, the number of fertile sows in China is still about 6% higher than the normal number, Next, the removal speed of pig overcapacity will determine the end time of this round of pig cycle.
“At present, China’s pig production capacity has entered the de industrialization stage. According to the data of the Ministry of agriculture and rural areas, the number of fertile sows in China began to decline month on month in July last year. According to this calculation, it is more likely that the number of pigs in China will begin to decrease in May 2022. However, the marketing rhythm of farmers will be affected by the market situation and expectations, which will change the time point of the actual supply inflection point Number. At the same time, the continuous improvement of the production efficiency of fertile sows may also partially offset the impact of the decline in the stock of fertile sows. ” Qin duogui told reporters that, therefore, the cashing intensity and timing of the pig market from capacity contraction to output contraction need to be paid special attention.
From the perspective of pig supply and demand, LV pin believes that the covid-19 epidemic has had a great impact on the social consumption of pigs in the past two years. After the impact of African swine fever and covid-19 epidemic, China’s pork demand has decreased significantly, most of which have been replaced by poultry meat. After the market returns to demand led, Whether the squeezed market share of pork is temporarily or permanently missing will determine the overall supply and demand pattern of pork in China.
It is worth noting that a few days ago, the Tariff Commission of the State Council issued a notice indicating that from January 1, 2022, China will cancel the provisional import tax rate on pork and resume the implementation of the most favoured nation tax rate, or play a certain role in protecting the development of China’s pig market in 2022. Qin duogui believes that the implementation of this policy means that China’s import pork tariff will be restored from 8% to 12%. Under the situation that China’s pig price returns to the normal range and the internal and external price difference is narrowed, the rise of import tariff cost may further inhibit the import of pork, so as to reduce the impact on China’s pig market.
In addition, how to use pig futures as a tool for risk management will also become the focus of the market in 2022. Zhang Xiaojun told reporters that in 2022, pig breeding enterprises can pay attention to the selling hedging opportunities of pig 2203 and 2205 contracts. Among them, the certainty of 2203 contract is relatively strong, and the uncertainty of 2205 contract lies in the situation of pig plague in northern winter. It is expected that the fluctuation range of pig futures in 2022 will be significantly weaker than that in 2021, and the target space for selling guarantee is relatively limited. It is recommended that enterprises enter the market when the price rises in the peak consumption season, control the position proportion and operate flexibly.
(futures daily)
