Trends and causes of rebounding pork prices
The price has been rising recently
Following a significant 46. 9 per cent decline in the price of pork in september, the average price of pork in the national wholesale market for agricultural products has recently been on the rise. According to ministry of agriculture and rural affairs monitoring data, as at 14 october, the average price of pork was $22. 28 per kilogram, an increase of 0. 4 per cent over the previous day, indicating that the upward trend was continuing. So, is this recovery in pork prices presage the turn of the cycle? How will future pork prices evolve
Factors influencing price recovery
From market analysis, the collection of frozen pork and the support of consumption demand in the short term contributed to the recovery in pork prices. Despite price increases, pork prices are still below pre-spring levels, as is the experience of ms. Zhang when she over-purchases five flowers from a large shop in the zhongyang district of beijing. Since mid-october, pork prices have shown a downward downward trend. According to ministry of agriculture and rural affairs monitoring, the wholesale price of pork from 15 to 22 october was $19. 73 per kilogram, an increase of 10. 2 per cent over the previous week, although it was 54. 7 per cent lower than the same period last year。
Experts pointed out that the price of pork had been pushed back by the collapse, the boost in the policy of freezing pork and the support of short-term consumption demand. Researcher zhu jinyong of the beijing institute of livestock and veterinary medicine of the chinese academy of agricultural sciences analysed the price of pigs falling to a low level after the national day, and in parts falling to less than 10 yuan per kilogram, which triggered a rebound demand in the market. At the same time, the increase in pork consumption in the north and the increase in the demand for salami in sichuan and hubei have further stimulated the increase in the demand for outbound pigs。
Current situation and challenges in the pig market
Pressure on pig farming
In the lower stage of the pig cycle, the pork collection policy was seen as an important initiative to stabilize market confidence. The second round of the central reserve of frozen pork has now been launched, and many responses have been made to the launch of the local frozen pork collection, which has undoubtedly contributed positively to the price of pigs. However, despite the rebound in pig prices, pig farming still faces high-cost multiple pressures. According to zhang kuo, the head of the yufeng farm in hebei pyi taw county, the price of pigs is now around $7 per pound compared to last month. Prior to that, the price of the out-of-barrel pig had dropped to $4. 6 per pound, at which time the sale at that price would face a substantial loss。
Response measures and industry perspectives
Pork farming is still at a loss compared to pig farming. According to zhang, the cost of each piglet has risen to around $600 due to the increase in feed prices and manual wages, while the sale price of the piglet cannot cover the cost, with more than 400 for each sale. In order to reduce their losses, farmers have the option of reducing the number of farms and optimizing the species structure of the herd. At present, pig farmers are in a “suffering period” of industrial adjustment. According to statistics from the ministry of agriculture and rural development, the losses in pig farms nationwide reached 76. 7 per cent in september, indicating industry's difficulties and challenges。
“at present, we are actively phasing out low-productivity pigs, while introducing high-quality pigs and enhancing staff training to improve overall productivity.” the head of the pig farm in the village of xu jiajiu, mima county, hebei province, was described as such. It is understood that many farming enterprises, especially large groups, have taken a variety of measures to control costs and reduce losses in response to industry difficulties. For example, strategies such as “the elimination of a low-yielding pig from the ten pigs, the elimination of a weak boy from the nest of pigs and the 10-day-early release of fat pigs” have been widely adopted。
Future pork price trends and policy implications
Oversupply market pressures
However, industry sources point out that despite recent rebounds in pig prices, which are driven mainly by changes in the short-term supply structure of raw pigs, the overall supply situation in the market has not fundamentally changed. Farmers should therefore be rational and avoid blind optimism。
Policy regulation and market expectations
At the same time, zhu yungyong stressed that the government sector should stabilize long-term support policies in the areas of finance, finance and land use in order to protect the incentives of pig farmers. Farmers themselves also need to accelerate the phase-out of low-yielding pigs, increase production efficiency of high-prevalence pigs and undertake disease prevention and control to ensure stable operations. Looking ahead, the trend in pork prices will depend on the availability of pork. At present, the supply and demand fundamentals of pork do not support a substantial increase in the price of pigs, and therefore the turning point of the cycle may not have yet arrived。
On 24 october, the wholesale market for the manghu and hot cities in inner mongolia was characterized by a spate of people choosing to buy pork. However, the supply situation in the raw pig market is not encouraging. According to ministry of agriculture and rural affairs monitoring, since march, the monthly number of new pigs and pigs on a scale has continued to climb, reaching over 30 million. Between august and september, the capacity of the whole country to store pigs was close to 110 per cent of normal holdings. The head of the department of livestock and veterinary medicine of the ministry of agriculture and rural development pointed out that it is expected that there will be a significant increase in the same proportion of fat pigs on the market between the fourth quarter of this year and the first quarter of next year, and that the relative oversupply of raw pigs will continue for some time. Without a substantial reduction in production capacity, it is difficult to fundamentally change the downward trend in pig prices。
The hole further analyses that “after next spring, there will be a dry season of pork consumption, and the price of pigs may go down even further, causing serious losses in pig farming”. Therefore, the primary task of macroregulation is to prevent large fluctuations in pig prices and to ensure stable prices for pork by stabilizing the production of raw pigs. The ministry of agriculture and rural development has taken a number of measures to address overcapacity in pig production. Starting in june, the ministry issued intensive early warning messages on changes in the raw pig market, leading to the rational organization of pig production in farms. At the same time, the opinions on the promotion of the sustainable and healthy development of the fertilizer industry were issued jointly with the relevant departments, with a view to stabilizing the order of production of the pig。
It was highlighted that the next step would be to focus on the reduction of raw pig production capacity, to strengthen monitoring of production and markets, and to publish early warning information on excess capacity in a timely manner. At the same time, farms (households) will be encouraged to accelerate the phase-out of low-yielding mother pigs and, in due course, the production of fat pigs will be restored to a reasonable level as soon as possible. In addition, the stability of long-term support policies, such as land use, environmental protection, loans and insurance, will be maintained, avoiding a “frequent turn” or “crackers” of policies to ensure a stable market supply over the long term。
