Original title: Think Tank Focus | From “Flying Pigs” to “Loss Pigs”! Has the pork price bottomed out?Five departments have taken action
The price of pork in China, which had once risen to a high level before, is now continuing to fall, but cheap pork makes people call it “really fragrant” and also brings new problems. For example, A-share listed pig-raising companies recently disclosed that their pig sales revenue has significantly slowed down, and some pig-raising companies even experienced increased sales but reduced revenues.
On June 9, the National Development and Reform Commission, the Ministry of Finance, the Ministry of Agriculture and Rural Affairs, the Ministry of Commerce, and the State Administration of Market Supervision jointly issued the “Plan for Improving the Government’s Pork Reserve Regulation Mechanism to Ensure Supply and Stabilization of the Pork Market” (hereinafter referred to as the “Plan”). The “Preplan” proposes to improve the monitoring and early warning mechanism for the live pig industry and pork market to provide basic support for the government’s pork reserve regulation and market guidance. According to different early warning situations, response measures such as the release of reserves and the purchase and storage of temporary reserves are initiated in time at the national and local levels.
The relevant person in charge of the National Development and Reform Commission stated that the “Preplan” gives full play to the important role of the government’s pork reserve adjustment as a key starting point, and insists on both “up” and “down” the prices of live pigs and pork, so as to ensure stable supply and stable prices. Stable prices to promote stable supply. When the price is too high, reserves will be put in to protect the consumption needs of residents, and the price will be reduced to a reasonable range to avoid excessive expansion of live pig production; when the price is too low, the purchase and storage will be activated to support the market, and the “reassurance” for farmers , To avoid excessive elimination of live pig production capacity.
Wu Chaoming, chief economist of Caixin Securities, told the Securities Times reporter that the impact of the landing of the “plan” and the arrival of the Dragon Boat Festival will help boost the demand for pork, but the price of pork is still facing downward pressure under the rapid recovery of the supply side. Although the introduction of the “preplan” is conducive to stabilizing market expectations and boosting confidence, and reducing the panic of farmers. However, the price of pork mainly depends on the relative changes in supply and demand. The current stock of reproductive sows in the country has returned to 97.6% of the normal year. It is expected to continue to be repaired in the second half of the year. Under the superimposed cost increase, farmers are more willing to panic to sell, and the supply of pork exceeds demand. The situation is difficult to change in the short term, and pork still faces certain downward pressure.
Falling prices hit pig farmersPerformance
Pork prices fell, happyCommon people, But it is unspeakable pain for some pig companies. Looking back from the end of December 2020 to the beginning of January 2021, the profit of raising a pig was as high as 3,000 yuan. Nowadays, farmers who purchase piglets have already begun to lose money, and self-raising and self-raising farmers have gradually entered the stage of loss.
China Merchants Futures Tu Yaqing said that the price of live pigs continued to fall to the level of self-reproduction and self-raising. Due to the continuous decline of pig prices and the high price of piglets, the cost of outsourcing piglet fattening fell below the cost for 8 consecutive weeks, and the loss continued to increase to 812 yuan per head. . Pig prices continued to fall, most of the group’s farms suspended their purchasing plans, and weak transactions led to the continued downward trend in piglet and sow prices.
This can be seen from the data released by some A-share listed pig companies.
Tiankang BiologicalOn June 7th, it was stated on the investor interaction platform that the company’s self-raising and self-raising pig farming cost is 14-15 yuan/kg.
Another leading pig farming companyWen’s sharesThere has been a situation in which the number of pork pig sales has increased, but the revenue has declined. The same reason is that the price of pork has fallen sharply year-on-year.Wen’s sharesPublishedannouncementIt shows that in May 2021, the company sold 956,700 pigs (including pigs and fresh products), a slight increase of 6.23% year-on-year, and realized revenue of 2.158 billion yuan, a year-on-year decrease of 37.79%. The average sales price of pigs was 18.26 yuan/kg, a year-on-year decrease of 38.33. %.
new HopeThe recently disclosed live pig sales briefing for May 2021 also showed that its live pig sales increased year-on-year, but its revenue fell year-on-year.new HopeAccording to the announcement, the company sold 693,300 pigs in May 2021, a decrease of 17.26% month-on-month and a year-on-year change of 40.60%; revenue was 1.396 billion yuan, a month-on-month decrease of 26.56% and a year-on-year decrease of 12.75%; the average sales price of commercial pigs was 18.46 yuan/ Kg, a month-on-month decrease of 14.38% and a year-on-year decrease of 35.30%.
However, in general, the cumulative sales revenue of pigs in the first May of this year was still positive for most listed pig raising companies compared with the same period last year. This was mainly due to the substantial year-on-year increase in slaughter and sales of pigs, which offset the sharp drop in prices. The impact, on the other hand, may be due to the fact that the decline in pork prices during the year was a gradual process, and the overall price in the first quarter of this year was still at a relatively high level.
Has the pork price bottomed out?
From manyIndustry Research ReportFrom a point of view, the vast majority of researchers believe that it is hard to tell the bottom in the short term.
According to the research point of China Post Securities, the downward price of pork seems to have not bottomed out.
China Post Securities pointed out that, according to data from the Ministry of Agriculture and Rural Affairs, the country’s live pig production capacity has recovered to more than 90% of the normal level by the end of 2020. The recovery of live pig production capacity will bring down the price of live pigs. Although the price may rebound seasonally in the future, the price of live pigs is generally on a downward trend. It is expected that the live pig industry will reach the bottom in 2022 or 2023.
Guotai JunanFrom the perspective of futures, from the perspective of long-term trends, the pig breeding industry is in the downward phase of the pig cycle, and production capacity is recovering rapidly. However, seasonal factors will still affect short-term price fluctuations. With the continuous recovery of domestic production capacity, it is necessary to achieve a 95% self-sufficiency rate for pork. The goal is that import dependence will continue to decline in the future.
How will the pig market develop after the “Preplan” is released?
The person in charge of the relevant department of the National Development and Reform Commission stated that as of the end of April, the stock of reproductive sows in China had returned to 97.6% of the normal year. The relevant parties expect that the number of pigs for slaughter in the second half of this year is expected to return to the normal level. As production capacity continues to recover, prices of live pigs and pork are expected to continue to return to a reasonable level. At the same time, the scale, standardization and biosafety protection level of pig breeding have been significantly improved compared with the past.
Zhu Zengyong, a researcher at the Beijing Institute of Animal Husbandry and Veterinary Medicine of the Chinese Academy of Agricultural Sciences, analyzed that in the short term, June is usually a low season for pork consumption. In addition, the current super-large pigs still account for a certain proportion of the pig herd structure and are expected to be digested by the market at the end of June. In the later period, with the overall increase in the enthusiasm of pork consumption and the promotion of consumption during the National Day and Mid-Autumn Festival, it is expected that there will be a seasonal rebound in pig prices in August and September. However, the overall supply of live pigs is relatively abundant, so there will not be much room for rebound. He further pointed out that this “preplan” focuses on ensuring the overall stability of life and production and the stability of pork prices. As the supply of meat involves basic people’s livelihood, relevant measures will also play a positive role in maintaining overall stability in the overall people’s livelihood in the future.
Chief Macro of Oriental JinchengAnalystWang Qing said that since June, the price of pork has fallen below 25 yuan per kilogram, and farmers generally lose money. Combined with the short-term trends of both ends of supply and demand, the decline of pork prices will slow down for some time in the future, which means that the month-on-month decline in food prices in June is expected to narrow.Comprehensive judgment, JuneCPIThe year-on-year increase is expected to rise slightly to around 1.6%, but it is still at a low level. In the future, there may be a number of measures to ensure supply and price stabilization. This is the most effective measure to stabilize current market expectations, especially to support the recovery of downstream SMEs.
(Source: Business School)
(Editor in charge: DF398)
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