Pig prices have entered a rising channel at the lowest level since 1992.
According to monitoring data from the Ministry of Agriculture and villages, the average price per kilogram of pork in the national agricultural products wholesale market was 20.40 yuan on April 26, up from April 17.
"under the influence of factors such as the release of frozen pork from the warehouse in April and the acceleration of fencing in some areas affected by the epidemic, pig prices experienced a pullback and then returned to the upward trend." Zhu Zengyong, an associate researcher at the Institute of Agricultural Information of the Chinese Academy of Agricultural Sciences, told the Economic Daily.
Zhu Zengyong believes that the African classical swine fever epidemic occurred not long ago in Danzhou City and Wanning City, Hainan Province, and there was a general lack of confidence among farmers and large-scale farms in southern sales areas, the enthusiasm of pig production increased, and the supply increased in stages. In addition, some stocks of frozen pork have been released from the warehouse one after another recently, but terminal consumption is still weak, orders for pork products have declined, and most slaughtering enterprises have reduced prices. Although pig and pork prices have fallen before, the rise in piglet prices has not stopped. Monitoring data from the Ministry of Agriculture and villages show that piglet prices across the country have risen for 11 consecutive weeks, with a cumulative increase of 70.1%. This shows that there are two problems: one is that the decline of sows can lead to insufficient supply of piglets, and the other is that the enthusiasm of breeding begins to pick up.
For the overall rise in pig prices so far this year, Zhu Zengyong believes that the fundamental reason is the decline in the supply of live pigs. According to data from the Ministry of Agriculture and villages, the number of live pigs in the country in the first quarter of this year was 375.25 million, the lowest level since 1992. The total slaughtering capacity of designated slaughtering enterprises above scale was 55.8261 million, down 6.25% from the same period last year. Slaughtering increased 6.4% month-on-month in January, 6.3% year-on-year, but fell 26.1% in February and 3.2% in March, indicating a decline in pig supply fundamentals, and the rebound in pig prices in February was mainly affected by insufficient supply. Since April, some frozen pork has been released from the warehouse and accelerated in some areas affected by the epidemic, leading to a correction in pig prices across the country. The regions with obvious callback are Zhejiang, Liaoning, Fujian, Jiangxi, Henan, Hubei, Guangdong and Guangxi.
Industry experts believe that pig and pork prices will continue to enter the rising channel, based on the later decline in inventory, further decline in pig supply and growth in consumer demand. According to data from the Ministry of Agriculture and villages, the year-on-year decline in the stock of fertile sows across the country expanded from 5.9% in October 2018 to 21% in March 2019, and the decline in production capacity is expected to continue into the second quarter of 2019.
Affected by African classical swine fever, the circulation of live pigs has declined significantly, and the supply of live pigs in some provinces will be significantly reduced and tight, which will lead to a continuous rise in pig prices in the second half of the year. The frozen meat in stock will be released before the National Day, and the supply will decline significantly after the National Day, and pork imports are expected to increase significantly. At the same time, consumption entering the peak season will drive pig prices to new highs in New Year's Day and the Spring Festival, which are expected to reach a high of about 22 yuan per kilogram.
"Pig prices are in an upward cycle in the second half of 2019 and will reach the peak of this cycle in the first half of 2020." Zhu Zengyong said so. For the majority of pig farmers, the good news is that pig prices will remain high in the next three years. Considering the increase in pork imports in 2019 and the impact on pork consumption to a certain extent, the cycle high of pig prices is expected to be about 24 yuan per kilogram. Under the price stimulation, especially after June, the filling of Sanyuan hybrid sows will increase, which will be conducive to the recovery of production capacity in the second half of 2020, but affected by the decline of sow stock, environmental protection policy, epidemic risk and other factors, the recovery rate of production capacity will be relatively slow. Pig prices will gradually fall from high levels in the second half of 2020 and are expected to enter a new price cycle after 2021.
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