The price of pigs is cut in half! Hog futures are diving again and again!

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Cows and pigs got together and fell faster than expected, and the farming end suffered a loss of 1,000 yuan.

From the high price of more than 40 yuan/kg at the apex of the current cycle to the low level of about 16 yuan/kg today, domestic live pig prices have continued to shrink, the trend has been nearly cut during the year, and the breeding end is almost at a full loss. Under the weak spot market, hog futures have also stepped out of the diving market recently.

A reporter from the Securities Times·e Company learned through various interviews with industry listed companies, small and medium-sized retail investors, and analysts that the industry's widespread hurdle pressure caused cattle and pigs to get together to impact the market, which is the main reason for the rapid weakness of the spot market in the short term. At present, the downward process of this cycle will continue, and a phased pullback in the second half of the year can be expected.

From "Lying Earn" to "Blood Loss"

“A group of big fat pigs of three to four hundred kilograms in the pen cannot sell at all. Now they are sold, and one loses thousands of yuan.” In early summer June, the high temperature in Henan has reached 40 degrees, Yuanyang County farmer Liu In the sultry pigsty of Hong (pseudonym), the overweight fat pig slumped to the ground, unable to lift the energy.

After experiencing the good days of "Lying Earn" in 2020, Liu Hong has never wanted to accept the reality that the market is gradually falling into a decline. The stock of pigs has gone from a normal level of more than 200 kilograms to 300 kilograms or 400 kilograms, and they are still reluctant to make a move. "I always thought that the price could go up after a while."

"At the best time, a standard pig of more than 200 catties can make two to three thousand. There are many people in Shili Baxiang who want to raise pigs. The piglets just after the full moon can be sold for one thousand seventy-eight. At that time, it was really profitable. "During the conversation, Liu Hong still recalled the dividends of raising pigs a year ago. Taking advantage of the profitability of raising pigs in the past two years, she has expanded her stock from a few dozen to three or four hundred now, but the current market conditions have put her in a dilemma.

She said frankly that there are now more than 100 cows and pigs weighing over 300 in her pigsty. After the summer, the weight of cows and pigs has increased slowly, but the prices of feed and anti-epidemic drugs remain high, and the cost of raising pigs is higher than in previous years. Has risen sharply. In the current situation where the price of live pigs for slaughter is less than 7 yuan/jin, pigs are raised for one day, and one day is lost.

"Every day I face these big pigs, I have a headache, and I have lost blood. If I don't sell it, I can't keep it." She sighed.

When retail investors are in deep loss, the profitability of large-scale factories is not optimistic.

The relevant person in charge of Wen's shares communicated with the reporter of Securities Times·e Company that the current market price has reached the cost line of integrated enterprises, or even below. Before the African swine fever epidemic, many companies lacked production capacity and adopted the model of outsourcing piglet fattening for production. At that time, the purchasing cost of piglets was 1700-1800 yuan per head, but now it’s hard to reach the cost of piglets even if the price of piglets is raised. In the case of outsourcing for fattening, if the cattle and pigs weighing 300-400 jin are raised, the average loss of the breeding head will exceed 1,000 yuan.

The rapid decline in the price of live pigs can also be seen from the end consumer market.

“Now the price of ribs has dropped by half faster than before the Spring Festival. The price of premium brand products is less than 50 yuan per catty, and the price of 30 yuan per catty in the farmers’ market may be less than 30 yuan per catty,” a brand meat salesperson also said, although pork The price has dropped significantly, but sales have not increased as much as expected. In the hot weather, meat consumption is inherently bad, and the price drops and the volume cannot be sold.

According to the monitoring of the Ministry of Commerce, from May 24 to 30, the national market price of edible agricultural products dropped by 0.8% compared with the previous week, and the price of meat dropped overall. Among them, the wholesale price of pork was 24.71 yuan per kilogram, down 3.3%. According to statistics from, on June 7, the national average price of meat-type pigs for slaughter was 16.05 yuan/kg, a single day drop of 0.19%, a decrease of 15.3 yuan kg from 31.38 yuan kg in the same period last year, and a year-on-year decrease of 48.85%.

"Although there were signs of a slight rebound in the price of pigs in some producing areas last week, in the context of the overall weakness of the national market, the decline soon resumed. The weakness of the spot market has made the futures market bearish sentiment accumulated. Last week, the main contract of live pig futures The price of 2109 has also begun to fall sharply." Bi Hui, a senior agricultural product researcher at the Baocheng Futures Finance Research Institute, told the Securities Times·e Company reporter that the recent contract has been in a state of high premiums before 2109, mainly due to the market’s impact on the pig market in the third quarter. There are certain expectations for the phased supply gap. However, due to the increasing pressure of the current spot price decline and the background of gradually approaching the delivery month, the futures price difference has returned, and the 2109 contract has accelerated decline, which is more than the drop in the spot market.

On June 7, the main live pig contract on the domestic futures market bottomed out at 2,109 yuan/ton to 19,310 yuan/ton. In the previous 10 trading days, the main contract kept breaking new historical lows, with a cumulative decline of 25%.

Cows and pigs get together, prices fall faster than expected

In the third quarter of 2020, the domestic pig market entered a downward cycle. Since then, the profitability of the breeding end has declined, and the industry has gradually approached a full loss. Since May, the concentrated production of cattle and pigs has accelerated the bottoming of the live pig market.

"According to the research situation, before the outbreak of African swine fever, the industry's average slaughter weight was 200-250 kg, but last year because the market price was still relatively good, there was a slaughter situation, and the slaughter weight was suppressed to more than 300 kg, or even 400 kg. Catches become "cows and pigs." There are even farmers who carry out secondary fattening for profit, raising more than 200 catties of pigs to 400 catties, which has led to the dilemma of concentrated cattle and pigs for slaughter in recent months." Bi Hui According to the analysis, as the temperature in the northern and southern regions rises, cattle and pigs have entered a situation of "eating without rising". At this time, the cost of feed is still high, the price of pigs is still falling rapidly, and farmers have to sell for slaughter. The concentration of these cattle and pigs for slaughter has led to significant market supply pressure, and the spot price of live pigs has accelerated. This also causes the market to go down as soon as there are signs of a rebound, and it is difficult for the market to rebound sharply.

In the interview, leading companies in the pig breeding industry also mentioned the impact of cattle and pigs on the market when analyzing the current downturn in pig prices.

"If a pig is raised to more than 300 kilograms, it will increase its meat volume by 20% compared to the normal season, and if it is raised above 400 kilograms, the meat supply will increase by more than 50%. Although statistics show that the current pig stock volume is not particularly large. However, meat production has increased significantly. As pigs are raised, the market supply will naturally increase. At the same time, if pigs are raised, they have to be sold, and the market will be trampled on, so the price drops rapidly.” Wen's shares The above-mentioned person in charge said that the current meat pig market environment is rather chaotic, exceeding market expectations. On the one hand, more cattle and pigs are sold, which impacts the market. On the other hand, the volume of imported meat has also increased, accounting for an increasing proportion of my country's meat market supply. Although there are still sporadic outbreaks in Africa, pig-raising companies have made significant profits in recent years. After the frenzied investment, the total market capacity has increased. Under the offset of the two, the supply side is still growing significantly.

The relevant person in charge of Muyuan shares also said that the price of live pigs has fallen by half since the beginning of the year, exceeding previous market expectations.

On the one hand, due to the market pressure, the supply is better than expected. On the other hand, the demand situation may not be particularly good. In addition, the market's impact on the epidemic also has factors that are too high.

A person in charge of a listed company in the unnamed pig breeding industry said that the current domestic cattle and pigs are relatively common, not only in small and medium retail groups, but also in large-scale factories. Although the total number of live pigs has not increased, the meat supply in the market has increased a lot, which has led to a decline in prices.

The price drop has directly led to the loss of profitability in pig farming.

According to data from Baocheng Futures, in January 2021, the average profitability of outsourced fattening in the domestic pig market was still RMB 1133.85/ton. By the beginning of April, the profit and loss reached a balance point. As of June 4, the average profitability of outsourced fattening The loss reached 749 yuan/ton. Under the self-reproductive and self-raising farming model, it has now stepped below the break-even line, with losses ranging from 200 to 300 yuan per region.

"Last week, the national pig market lost more than 700 yuan/head for fattening from outsourcing. This is the average loss per head at a normal weight, and the loss of cattle and pigs is even more than 1,000 yuan." Bi Hui analyzed that scale farms There is a certain gap between the cost of small and medium-sized farmers. Generally, the cost of large-scale farms is higher than that of small and medium-sized farmers because they include vaccines, labor, and plant inputs. During the survey in May of this year, large-scale farms in Anhui were in a state of capital preservation, and some of them had already suffered losses. The current loss situation may not be optimistic.

Feng Yonghui, an analyst at, also analyzed that the market has bottomed out in recent days due to the sluggish terminal consumption constraints and the increase in slaughter of large-weight pigs before the festival. Overall, the national pig farming has been in a state of overall loss, and the loss of the breeding end has further increased. At present, the average loss of the second fattening head is as high as about 1,500 yuan. , The loss of pig raising has reached 400-500 yuan/head.

Pig food ratio "failure" under high cost

While easing supply has brought prices down, pig farming still faces pressure from the continued high cost side.

Since March 2020, domestic corn prices have started to rise, reaching nearly 2,900 yuan/ton in January this year, a record high. According to Zhuochuang data, as of June 4, the purchase price of Shouguang Golden Corn in Shandong Weifang was 2900 yuan/ton, an increase of 50 yuan/ton from the end of May, an increase of 1.75%.

In this context, news from showed that in early June, a large number of feed companies successively announced feed price increases due to the continuous increase in the price of feed ingredients. In order to ensure the quality of feed products, more than a dozen feed companies including Jiangmen Haida, Zhanjiang Liyuan, Maoming Hailong Feed announced that the feed for pigs, chickens and ducks will increase by RMB 50-75 per ton.

According to data from Baocheng Futures, at the beginning of 2021, the average feed cost of pig farming was 1097.25 yuan, and by the end of February it reached a maximum of 1193.01 yuan. As of June 4, the average feed cost is still 1157.1 yuan. The fall in pig prices did not shake up the high feed prices.

According to data calculated by the National Development and Reform Commission, the national pig feed price ratio this week was 5.96, a drop of 2.3% from the previous month. Based on current prices and costs, the average loss of pig breeding in the future will be RMB 202.68.

Zhuochuang data also shows that the average price of pig feed this week has reached 3090.75 yuan/ton. From the perspective of feed companies, with the increase in corn prices, the use and import of corn-related substitutes continue to rise. According to customs statistics, from January to April 2021, domestic imports of 8.58 million tons of corn, 3.07 million tons of sorghum, 3.54 million tons of barley, 2.23 million tons of dried cassava, and 90,000 tons of DDGS, total 17.51 ​​million tons.

The price of corn is strong, coupled with the rising costs of disease prevention and control of pig farms, personnel wages, water and electricity, environmental protection, etc., the traditional observation index used to measure the average cost of the pig industry-the ratio of pigs to food, has been difficult to be used to measure the evolution of the market.

"As the African swine fever continues, the difficulty of raising pigs has increased. At the same time, the prices of piglets and sows that everyone buys are different, so the concept of pig food ratio is not of much reference value under the current chaos." The person in charge of Wen's shares said.

"The pig-to-food ratio is currently invalid." Bi Hui also said that feed prices have been at a high and strong stage, but pig prices have continued to fall. The decline in pig prices is not due to the impact of the pig-to-food ratio, but to market supply and demand. Therefore, the pig-to-food ratio calculated under the market conditions this year has a weaker effect on the market compared to the value reflected in the pig cycle in previous years.

“In the past, the pig-to-grain ratio was lower than 8 as an early warning, but it has been below 8 in May this year. Large-scale farms are already in a state of loss. Feed tray and spot prices are still high, but the price of live pigs is still falling. The extent of the loss has further increased, and the price change trend cannot be measured by the ratio of pigs to grains," she said.

According to previous monitoring by the Ministry of Agriculture and Rural Affairs, before the African swine fever epidemic, the cost of pig breeding was about 12.5 yuan per kilogram, and the current cost of breeding pigs per kilogram increased by about 4.5 yuan compared with that before the epidemic, an increase of about 36%. Among them, the price of corn rose from 2 yuan per kilogram before the epidemic to 3 yuan in the near future, an increase of 50%; the increase in corn prices caused an increase in the average cost of pig breeding by about 280 yuan. The average cost of prevention and control of African swine fever on large-scale pig farms has increased by about 103 yuan, and the cost of manure treatment has increased by 50 yuan. Other cost items such as piglet costs, labor costs, death losses and fixed asset depreciation have increased to varying degrees.

The trend of market capacity expansion is difficult to reverse in the short term

From 2019 to 2020, supported by rising profits brought about by the continuous upward price of pigs, listed companies in the domestic pig breeding industry chain staged a frantic layout drama, and investment in projects of tens of billions of yuan is not uncommon.

After the price of live pigs fell to the cost line, the pace of market capacity investment and construction continued.

Recently, Chia Tai, which focuses on feed production and pig breeding, officially disclosed its prospectus and plans to be listed on the main board of the Shanghai Stock Exchange.

According to the prospectus, CP plans to use 15 billion yuan of raised funds this time, of which more than 70% will be used to invest in pig industry chain projects, pig breeding farm construction projects, pig breeding and supporting fattening projects.

"For large-scale enterprises, the distribution of live pig production capacity is a long-term process, and the long-term thinking will not be changed due to the drop in pig prices. Compared with small and medium-sized farmers, the ability of large-scale factories to resist risks is gradually enhanced, and the right to speak in the market is gradually increasing." Bi Hui analyzed that although according to the previous data of the Ministry of Agriculture and Rural Affairs, the stock of sows in my country has basically returned to the level before the African swine fever epidemic, the trend of continuous expansion of market production capacity in the short term will not be reversed.

"At present, although the scale of live pigs in major factories has fallen from the peak in the first half of the year, it has increased year-on-year. And behind this decline is the optimization of the structure of breeding sows. Once the market price picks up, it can quickly increase production capacity." According to the analysis, in the process of falling pig prices, the sow inventory and the inventory structure have been continuously optimized, which is directly reflected in the optimization of the structure of dual and ternary sows. In the first half of this year, the culling of sows in large-scale factories was on the rise, with a year-on-year increase of 10%-20%. The increase in sow culling was mainly for the elimination of ternary sows, and the proportion of binary sows was gradually increasing. . When the price of pigs is high, a sow can produce 3-5 pigs and can be profitable. However, when the price is low, sows with a basic production capacity of less than 10 heads are being eliminated. Once there is a rebound, it can quickly expand production.

She believes that although the price of pigs is low, the current large-scale factories are not very pessimistic, and they are still looking forward to a rebound and a mentality of bucking the trend. This optimization of the layout determines the basis for the long-term recovery of live pig production capacity. A large part of the expansion of the scale of the factory is used to optimize the structure of the sow stock and the backup layout, as a strategic layout. Dachang's current layout is to look forward to the rapid start of production after the price of pigs rebounds. If we can seize the rhythm of the market capacity supply gap in time to supplement capacity, we can still make up for the loss in the first half of this year.

The person in charge of the above-mentioned unnamed listed company also agreed with this. He said that if the production capacity is deployed at the high point of the live pig price, then the production capacity will just catch up with the low price after the realization of the production capacity. Therefore, large-scale enterprises will not change their business strategies due to high or low market prices, but plan a long-term fight cycle, and the main goal is to reduce costs. Although large-scale factories have increased a lot of production capacity, the leading companies still do not have a say in national prices. Therefore, the process of increasing industry concentration will continue, and losses are also periodic.

However, the above-mentioned person in charge of Wen's shares believes that under the current situation of losses in pig breeding, the industry as a whole is struggling, and some companies have begun to experience funding constraints.

Zhang situation, although there is a production capacity layout, but it may also face shutdown. The company's original production capacity is not bad, but under the current market situation, it is necessary to make full use of its production capacity and improve the quality of production capacity. Although the overall market capacity will show a heavy volume, the current rate of heavy volume will slow down.

The above-mentioned person in charge of Muyuan shares also believes that the speed of enterprise expansion depends on the capital situation. "In the first two years, if everyone has money, the speed of construction will be accelerated. Now that the price is low, we will definitely give priority to guaranteeing the company's production and operation, and construction will be properly arranged according to the capital situation.

Observation: The bottom of the pig cycle has not yet arrived, and it is expected to usher in a phase of callback this year

On June 8th, 2109, the main hog futures contract on the domestic futures market, closed down again in the context of intraday trading. This is the tenth consecutive trading day that the main contract has closed down.

When the hog industry is losing money, where can the price of hog futures fall?

Bi Hui, a senior agricultural product researcher at the Baocheng Futures Finance Research Institute, believes that when the hog spot market can evolve from a partial rebound to a full rebound, then it can determine the space for the return of the hog futures spot spreads and the slowdown in the price of hog futures. Time. Currently, the pig industry has strong cost support. At present, the breeding cost of large-scale farms and small and medium-sized farmers is 1600-2000 yuan/head, and the converted futures price is 14500-18000 yuan/ton. Therefore, the support level for the downward decline of futures prices is 18000 yuan/ton. A downward trend will lead to a decline in the resistance of the industry, and the decline will slow down.

Undoubtedly, the price trend of live hog futures reflects the market's judgment on the trend of live hog spot price to a certain extent.

"Large-scale farms approaching the cost line does not mean that prices will stop falling. In the previous years when the pig cycle was more obvious, large-scale factories would also lose money. It would not stop falling when the cost line was reached, but it would show that the industry's resistance fell. Bi Hui believes that although the price of live pigs has fallen from a high point this year, the extent of the fall is still limited. The short-term decline has accelerated in the near future. It is more due to the concentrated sales of cattle and pigs and imported meat. This kind of cliff diving will not fall. continued. And next year, the industry will be affected by this year's sharp decline, which will have an impact on the pace of small and medium retail investors to fill the market next year, but the pace of large-scale factories will not change. Small and medium retail investors may face withdrawal from the market next year.

In the interview, although leading companies and analysts mostly believe that the current pig cycle has not yet bottomed out, there are also optimistic expectations for the phased rebound in the second half of the year.

"From historical experience, the cycle low will fall below the industry average price. After a period of time, the price will be adjusted. Now the price has fallen below the cost price of most companies, and there may be a price rebound in the second half of the year. Cycle lows will have multiple bottoms, so as to realize the gradual clearance of production capacity. Therefore, after the market price rebounds, it may fall back." The relevant person in charge of Wen's shares believes that the pig price at the cycle lows in previous years can fall below the lowest point. 5 yuan/jin. The last cycle low occurred at the beginning of 2018, but at that time African swine fever had not yet appeared. After the outbreak of the epidemic, the cost of pig breeding has increased significantly, and the current cost per catty is more than one yuan higher than that at the time. Coupled with the current high prices of bulk commodities and the increase in the cost of production and living, the low point of this round of the pig cycle may not reappear the low prices of previous years.

The person in charge of an anonymous pig breeding listed company told a reporter from Securities Times·e Company that the current loss of pig breeding is short-lived and will not last for long. On the one hand, after the emergence of the African swine fever epidemic, the rigid cost of breeding has increased. On the other hand, winter demand will also improve accordingly. In addition, there were many piglet diarrhea in the first quarter of this year. The impact on production capacity is mainly reflected in the third quarter. The relative decrease is expected to support the recovery of pig prices. Therefore, comprehensively, large-scale factories are generally profitable throughout the year.

Bi Hui also agreed with the expectation of a phased rebound in the third quarter. She said that large-scale factories have strong financial strength, relatively strong anti-risk capabilities, and relatively fixed production rhythms. Therefore, the most concerned variable in the market is not large-scale farms, but small and medium-sized retail investors. At present, the loss of fattening of purchased piglets is increasing. In this case, small and medium-sized farmers would prefer to empty the slaughter instead of making up the slaughter. This will lead to a straight decline in the number of small and medium-sized retail investors in four months.

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