On January 19, Sichuan released the data of main economic indicators in 2021. As a major pig raising Province in China, Sichuan's pig production capacity has recovered significantly. According to the data, Sichuan Province achieved 63.148 million pigs in 2021, a year-on-year increase of 12.5%, ranking first in the country. Zeng Junlin, spokesman of Sichuan Provincial Bureau of statistics, told Securities Daily that the goal of pig production capacity recovery was completed ahead of schedule, and pig prices have returned to the normal range.
Sichuan pig production capacity recovers year by year
Developing modern agriculture is an important part of Sichuan's industrial structure layout. The 14th five year plan of Sichuan Province and the outline of long-term objectives for 2035 issued in 2021 proposed to vigorously develop modern agriculture and ensure important Shenzhen Agricultural Products Group Co.Ltd(000061) effective supply. These include: "promoting standardized large-scale breeding of livestock and poultry such as pigs, building a national strategic guarantee base for high-quality commercial pigs, and stabilizing the annual slaughter of pigs at about 60 million". In recent years, Sichuan has issued several measures to alleviate the fluctuation of production cycle and its impact.
According to the data, from 2018 to 2020, the slaughter volume of pigs in Sichuan was 66.383 million, 48.526 million and 56.144 million respectively. After the decline, the pig production capacity recovered year by year.
\u3000\u3000 "From the perspective of pig price trend, the price of pigs in 2021 first fell and then rose, showing a V-shaped trend. Quarterly, the average price of pigs dropped by 11.8%, 40.3%, 60.3% and 48.1% year-on-year, that is, the price of pigs fell the most sharply in the third quarter. However, with the gradual emergence of the effect of national collection, storage and market support, the superposition of autumn and winter is the peak season of pork consumption, and the demand increased in the fourth quarter Pig prices rebounded. From the perspective of the income of breeding farmers, after experiencing high profits at the beginning of the year and medium and deep losses, pig breeding turned from loss to profit with the recovery of pig prices in the fourth quarter. " Zeng Junlin said.
He further told the Securities Daily that looking ahead, the Spring Festival is the peak season for pork consumption, and after the Spring Festival is a low season. In the third quarter of 2021, the price fell deeply, and the downward cycle superimposed high costs (feed, manpower, etc.), which affected the enthusiasm of farmers. From the perspective of cycle, June 2021 is the high point for breeding sows. The supply of pigs will increase from April to may 2022. In addition, it is a low season after the Spring Festival. Therefore, it is expected that the probability of pig price falling after the Spring Festival and before the first half of 2022 is relatively high.
pig breeding stocks face emotional and performance repair
From the perspective of industry, this round of pig cycle has brought significant impact to pig breeding enterprises. In the first three quarters of 2021, A-share pig breeding enterprises almost generally suffered net profit losses. Many enterprises said that they would continue to reduce breeding costs by means of technology improvement. At the same time, they would also adjust the pace of capacity expansion through reasonable planning.
In this context, market analysts are looking forward to the bottom of the industry cycle and the reversal in the future. The Pacific Securities Co.Ltd(601099) Securities believes that the recent decline of pig price has accelerated, and the industry has entered the stage of comprehensive loss again. On the supply side, judging from the changes in the stock of fertile sows in the early stage, it is expected that the number of prenatal pigs will keep increasing month on month in April 2022; On the demand side, the peak of bacon production and the end of the Spring Festival stock period weakened the driving force of consumption growth. Under the change of supply and demand, the market pattern tends to loosen, and it is expected that the pig price will continue to adjust after the festival. "According to official data, although the speed of capacity removal in the industry has slowed down recently due to the rebound of pig prices, the trend of capacity removal continues. We firmly believe that after the double festival, with the continuous adjustment of pig prices, the pace of capacity removal in the industry will accelerate, and the new cycle will reverse or come in the second half of the year."
Citic Securities Company Limited(600030) said that at present, the overall pig supply is still in a surplus situation, there are losses in breeding in some areas, and the second wave of de capacity is gradually opened. At the level of listed companies, the worst performance point has passed, and breeding stocks are facing emotional and performance repair.
"The pig breeding industry may usher in a process of recovery in 2022. After all, the periodicity of pork is very obvious." Jiang Han, a senior researcher of Pangu think tank, told the Securities Daily that what is needed for pig breeding enterprises in 2022 is a truly targeted market layout. "The previous excessive layout of the pork market and a large number of repeated investments have resulted in the overall pork price being significantly too low in 2021, and even dampened the enthusiasm of the whole pork breeding enterprises and farmers. This situation should be avoided in 2022, so under such circumstances, we should carry out effective market layout and find the direction of long-term ism in market development , this may be what enterprises need to do most in 2022. "
