January 10 coincides with Laba in the lunar calendar, and Laba is the new year. According to the situation in previous years, the current is the peak season of pork demand. However, the reporter of China Securities Journal visited the market and learned that the price of pork has fallen below 8 yuan / kg recently.
Liu Tong, head of Beijing Xinfadi Market Statistics Department, said that pork prices decreased significantly on a weekly and monthly basis, with a significant year-on-year decrease.
pork price reaches stage low
“It’s not normal.” On January 10, 2022, Mr. Wang, the person in charge of a pig breeding cooperative in Leshan City, told the China Securities Journal that “if it is normal, it is normal for the pig price to be as low as 8 yuan and 9 yuan during this period, but it is selling when it falls to 7 yuan and 6 yuan, which is definitely abnormal.”
According to the latest data of the Ministry of agriculture and rural areas, from December 27, 2021 to January 2, 2022, the average purchase price of pigs of designated pig slaughtering enterprises above designated scale in China was 17.63 yuan / kg, a month on month decrease of 1.1% and a year-on-year decrease of 50.7%. The average ex factory price of white striped meat was 23.38 yuan / kg, a month on month decrease of 1.0% and a year-on-year decrease of 48.5%.
Mr. Wang said: “near the Spring Festival, everyone is trying to sell pork. Generally speaking, this period is the peak sales season. If you don\’t focus on sales, the price of pigs will be lower, so everyone rushes out of the market. In addition, it also proves the current situation of the industry with overcapacity.”
The reporter learned from Beijing Xinfadi market that the average wholesale price of white pork in Xinfadi market last Friday (January 7, 2022) was 18.50 yuan / kg, down 7.50% from 20.0 yuan / kg on December 31, 2021; Compared with 21.25 yuan / kg in the same period last month (December 7, 2021), it decreased by 12.94% and 56.21% compared with 42.25 yuan / kg in the same period last year.
Zhang Lili, a pig analyst at Zhuo Chuang information, told the China Securities Journal that with the approaching of the Spring Festival, the enthusiasm of breeding end marketing has increased, especially the marketing volume of large-scale farms in the South has increased significantly, the source of pigs is slightly abundant, and the acquisition of slaughtering enterprises is smooth. Recently, although Laba Festival has supported it, there is limited room for demand improvement, and it is difficult to improve the delivery of white striped meat; At the same time, most slaughtering enterprises are in a state of loss, and the purchase intention to lower the price is strengthened. Therefore, under the guidance of supply pressure, the pig price continues to fall.
“cost reduction” affects industry development
Mr. Wang, who started pig breeding in 2004, has experienced several rounds of “pig cycle”. Faced with the ups and downs of pork prices, Mr. Wang made a difficult decision in August 2021 and sold all pig assets. “At present, we are considering changing careers to other businesses. All the housing assets previously invested have been used as warehouses,” he said
“The market is not good, give up breeding.” Mr. Wang lamented that in the past two years, his cooperative used to have more than 200 members, but now there are only 20-30 households.
According to Mr. Wang’s observation, large feed companies are setting up farms. In the future, collectivization and corporatization will be the trend. The cost of the whole industrial chain layout will be much lower than that of cooperatives in all aspects.
Muyuan Foods Co.Ltd(002714) said in an investor survey that the company’s goal of cost reduction in 2022 is to achieve a complete cost of 13 yuan / kg in stages. In the next step, the company will reduce the dispersion of breeding achievements within the company and reduce the overall breeding cost by improving the operation of high-cost backward farms and subsidiaries, strengthening internal management and personnel empowerment training.
listed companies “combined fist” to reduce risk
When pork prices go down, listed companies often use a “combination fist” to stabilize risks. The relevant person in charge of Wens Foodstuff Group Co.Ltd(300498) said: “the company’s business principle is\’ steady development and controllable risk \’.” In order to cope with the impact of the pig cycle, the company mainly starts from controlling capital expenditure, abundant existing cash on hand, enriching financing channels, ensuring capital safety, issuing convertible bonds, etc.
Liu Tong said that at present, it has entered the twelfth lunar month. Generally, from the twelfth lunar month to the twenty third lunar month, it will enter a peak meat consumption season, and there will be a peak procurement before the Spring Festival. However, in the case of sufficient supply of pigs, pork prices actually have no incentive to rebound.
(source: China Securities Journal)
