SunSirs: Intensed Supply-demand Game, China Pig Price Fluctuated and declined significantly in 2023, and will Hard to Rise in 2024

According to the monitoring of SunSirs, in 2023, the overall price of domestic pigs fluctuated downward. In January, the price of pigs dropped significantly, rebounded slightly in February, and weakened again in March. In the second quarter, the price of pigs continued to fluctuate at a low level and hit the bottom. In July, the overall price of pigs hit the bottom and rebounded sharply. Starting from September, the price of pigs fell again and then fell for three consecutive months. In December, it rebounded slightly, and the price of pigs fluctuated weakly throughout the year. The average price on January 1st was 17.72 RMB/kg, and on December 29th, it was 14.42 RMB/kg, Within the year, there was a significant drop of 18.62%, and in 2023, the domestic price of live pigs fluctuated by 24.69%.

Review of Domestic Pig Market Price Trends in 2023

During the New Year's Day period, the demand for meat in the domestic market remained sluggish. After the holiday, the intention of farmers to sell their products did not decrease, and the supply of live pigs in the market continued to increase. Under the pressure of strong market supply and weak demand, the prices in the domestic live pig market continued to be weak. During the Spring Festival, the domestic pig market trade basically stopped, and pig prices slightly stabilized. After the year, the supply of the pig market gradually rebounded, and pig prices continued to be under pressure and weakly bottomed out. On February 9th, they fell to 14.27 RMB/kg, a significant drop of 19.47% compared to the beginning of the year.

The deep decline in pig prices has triggered farmers to be reluctant to sell and raise prices. In addition, the policy of collecting and storing frozen meat has boosted the mentality of farmers to be reluctant to sell and raise prices. As a result, the overall supply of the domestic pig market is tight, and slaughtering enterprises are raising prices to replenish inventory, which has led to a slight rebound in domestic pig prices in February.

Due to the continued sluggish demand in the terminal meat market, slaughtering companies have continued to lower their prices and purchase intentions since March. In addition, with the gradual rise of domestic temperatures, previously suppressed pigs have gradually entered the market circulation stage. The problem of strong supply and weak demand in the domestic pig market has become prominent, and the overall pressure on pig prices has fluctuated weakly.

In mid April, domestic pig prices fell to the 14 RMB/kg mark in many areas, triggering farmers to be reluctant to sell and raise prices. The overall supply in the pig market was tight, and slaughterhouses raised the purchase prices of pigs to ensure market supply. The rise in pig prices further triggered farmers to be reluctant to sell, and the supply in the pig market continued to be tight. In late April, domestic pig prices hit the bottom and rebounded, but continued to rise. At the end of the month, they were suppressed by the sluggish demand in the terminal market, The overall price of pigs has slightly declined again. Long short game, from May to June, the domestic pig price continued to be around 14 RMB/kg, pulling forward. The market supply and demand game continued to intensify, and the overall rise and fall of domestic pig prices were mixed. Due to the continued sluggish demand for terminal meat, the overall low pressure on the domestic pig market prices fluctuated weakly.

In July, domestic pig prices fell below the 14 RMB/kg mark, and the pig to grain ratio dropped below 5:1. The country launched the second batch of frozen meat storage, which supported the domestic meat market prices. In addition, typhoon weather brought a lot of rainfall, and high temperatures and heavy rain to some extent affected the export of live pigs. The overall supply of live pigs in the market was tight, and pig prices rebounded significantly after hitting the bottom. On August 10th, the price of pigs rose to 17.17 RMB/kg, a significant increase of 24.69% compared to the low point of the first half of the year on June 30th (13.77 RMB/kg). Within six weeks, the increase in pig prices smoothed out the decline in the first half of the year. After a significant rebound in pig prices, farmers increased their intention to sell their pigs for cash. In addition, the terminal acceptance of the rapid increase in pig prices was poor, and the demand for meat in the market was even weaker. The overall procurement of slaughtering enterprises was more cautious, and their intention to purchase at a lower price was obvious, The sustained high breeding costs provide strong support for the bottom of domestic pig prices, and the supply-demand game in the domestic pig market continues to intensify. Starting from mid August, the overall increase in domestic pig prices has stabilized and then fluctuated slightly at a relatively high level.

Entering September, due to the continuous downturn in terminal demand, domestic pig prices have ended the three week consolidation situation, and pig prices have once again weakened and declined. Under the pressure of factors such as lower than expected demand during holidays, a loosening mentality among farmers who are reluctant to sell and raise prices, and an increase in their intention to sell and monetize, the domestic pig market has once again returned to a strong supply and weak demand situation after multiple rounds of supply and demand games. Pig prices have begun a more than three-month journey of fluctuating decline. As of December 8th, pig prices have fallen to 13.97 RMB/kg, a decrease of 18.64% from the high point on August 10th.

In mid December, after the average price of live pigs in China fell again to the 14 RMB/kg mark, the mentality of farmers to be reluctant to sell and raise prices became stronger. In addition, the significant drop in domestic temperature and snowfall in many areas have greatly increased the difficulty of pig transportation. The overall supply of the live pig market is tight, and slaughtering companies have raised prices to purchase, which has led to a slight rebound in the domestic live pig market prices. Due to the suppression of lower than expected terminal demand, the overall rise in pig prices has stabilized and then fluctuated slightly.

Under the comprehensive influence of multiple factors such as domestic pig inventory, pig cycle fluctuations, supply and demand, epidemic, frozen meat storage and release, weather, etc., the domestic pig futures prices in 2023 will generally follow the fluctuations of domestic pig spot prices. The overall fluctuation range of pig futures is greater than that of pig spot prices. Throughout 2023, the overall price of domestic pig futures has remained relatively low and fluctuated narrowly, which can be roughly divided into three stages:

From January to early July, under strong supply and weak demand pressure in the pig market, pig prices maintained a downward trend. Supported by policies and terminal reluctance to sell at high prices, there was a slight upward trend in the February and April pig futures market, but the overall upward momentum was insufficient. After a slight increase, it once again fluctuated weakly and declined.

From late July to August, due to the continued weakness of pig prices, the domestic pig breeding industry suffered losses for more than half a year in July. After pig prices were completely wiped out and fell to the 14 RMB/kg mark, farmers were reluctant to sell and raise prices, leading to an increase in futures prices. At the same time, the policy of secondary collection and storage has once again boosted prices in the domestic pig futures market, leading to a sustained rebound. Due to strong market supply and weak demand, the overall paper price of pigs has stabilized, but it has once again operated weakly.

From September to the end of the year, due to the impact of the African swine fever situation in some regions, the domestic pig output continued to increase in the fourth quarter, and the demand for terminal meat markets remained weak. The pressure of strong supply and weak demand in the market was once again highlighted, and domestic pig prices were once again under pressure and weakened, leading to a decline in futures prices.

Analysis of Factors Influencing Pig Prices in 2024

The price of domestic live pigs will be affected by various factors, including changes in inventory, demand in the terminal market, breeding and feeding costs, piglet costs, national policies on storage, and weather. Among them, supply and demand as well as costs account for a large proportion.

Prediction of Domestic Pig Price Trends in 2024

SunSirs pig product analyst believes that overall, the domestic pig prices in 2023 are lower than those in 2022, and are fluctuating at a low level in the past three years. From the supply side perspective, the overall domestic pig inventory in the first half of 2024 is still at a relatively high level, and the supply in the pig market will continue to be high. The continued loose supply will form a certain pressure on the overall pig price in 2024, and it may be difficult for the pig price to fully recover significantly. The overall price will continue to fluctuate and move forward in a relatively low range.

At the end of the year, although there was a slight rebound in demand in the terminal meat market, it was suppressed by lower than expected annual consumption. Before the holiday, the domestic pig market supply will continue to be sufficient, and the overall terminal demand will be stable. It is expected that the domestic pig market prices will continue to remain stable, moderate, and weak before the Spring Festival.

After the holiday, it is the off-season for traditional meat demand, and pig prices may continue to be under pressure and adjust weakly. The start of school in March, coupled with a slight decrease in the number of pigs sold, is expected to see a certain recovery in domestic pig production in the second quarter. It is expected that the domestic pig market prices will continue to be mainly affected by domestic supply and demand conditions and cost fluctuations in 2024, and the overall price will fluctuate within the range of 14-20 RMB/kg.

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