A new round of “pig cycle” has begun. Since late April, pork prices have bottomed out and rebounded, and the “rising sound” is obvious. A few days ago, according to the data of the price monitoring point of the farm direct reporting information platform of the Ministry of Agriculture and Rural Affairs, in July 2022, the average price of live pigs in Guangdong, a major pork consumption province, was 24.06 yuan/kg, a month-on-month increase of 28.66% and a year-on-year increase of 36.63%.
The rapid rise in food prices and the expansion of the increase has become the main reason for the increase in the consumer price index (CPI). According to data from the official website of the National Bureau of Statistics, the CPI in July rose by 2.7% year-on-year, hitting a new high in the past two years, an increase of 0.2 percentage points from the previous month. Among them, the reduction of the production capacity of live pigs in the early stage, the reluctance of farmers to sell and the recovery of consumer demand, etc., under the influence of these factors, the price of pork increased by 20.2% year-on-year.
“my country’s CPI basket is highly dependent on food prices, especially pork prices. At present, a new round of ‘pig cycle’ has begun, which may drive the rise of CPI food items higher.” The “2022” released by the Monetary Policy Analysis Group of the People’s Bank of China on August 10 China’s Monetary Policy Implementation Report in the Second Quarter of 2008 stated that since 2006, the country has experienced about four rounds of “pig cycles”, each of which lasts about four years, and the first 1.5 to 2 years is a period of price rise.
Changes in pork prices have obvious cyclical characteristics. Previously, domestic pork prices had been falling all the way, and dropped to a stage low in April 2022. It has been about four years since the start of the last cycle around May 2018. “Pork prices have been trending upward since late April, especially after the second half of June, when price increases accelerated and the slope of the upward curve became steeper. The average wholesale price rose more than 40%,” said the aforementioned report.
Pork farming has recovered from losses, and profitability has improved. Taking Guangdong as an example, data from the Marketing and Information Technology Department of the Provincial Department of Agriculture and Rural Affairs shows that in the first half of 2022, the large-scale base lost 306.1 yuan per slaughtered pig, and continued to lose money from January to May, but it recovered to profit and loss in June. Balance point, breeding pigs and piglets are profitable.
Source: Official website of Guangdong Provincial Department of Agriculture and Rural Affairs
A research report from AVIC Securities on August 13 pointed out that the current cost-side feed price has weakened to a certain extent, and the breeding profit has improved.
Meizhou in eastern Guangdong is a major pig breeding market in Guangdong Province. At the beginning of the year, pig prices continued to be low, and retail investors sold “big pigs”. Wang Yanguang, president of Meizhou Tailian Pig Breeding Professional Cooperative, told Nandu reporters that retail investors currently earn between 200 and 300 yuan per pig. With the start of school approaching and the Mid-Autumn Festival approaching, the market sentiment is bullish. “The old breeders are more rational and normal to supplement the fence, and the new breeders will be more active. But the increase in the later period should not be very large.” Wang Yanguang said.
“The reasons for the start of this round of pig cycles are significantly different from previous ones. There are no external disturbances such as pig diseases and environmental protection policies. The contraction of the supply side is due to the reduction of production capacity after the deep losses of farmers, and the damage to industry cash flow is much higher than that of the industry. The past few rounds of pig cycles may affect the willingness to replenish the stock in the future.” Everbright Securities said in a research report on July 21.
According to the “China Monetary Policy Implementation Report for the Second Quarter of 2022”, the current domestic supply of live pigs is generally abundant, and the price increase of pork in this round of “pig cycle” is expected to be relatively mild compared with the period of swine fever in 2019, but it will still be in the period of rising prices. Bring a certain pull-up effect to the CPI.
Many people familiar with the pig market pointed out that there is no shortage of pigs in the market, and the stock of live pigs has stabilized. From the perspective of production capacity, it is difficult to support the long-term rise in prices. In the previous round of “pig cycle”, the national live pig price once exceeded 40 yuan/kg.
“This year is a transition from loose supply to a basic balance.” Zhu Zengyong, a researcher at the Beijing Institute of Animal Husbandry and Veterinary Medicine, Chinese Academy of Agricultural Sciences, said that the last pig cycle that just ended was different from the past. Since July, the number of breeding sows has dropped from a high of 45.64 million to 41.85 million by the end of the first quarter of 2022.
Zhu Zengyong believes that the scale level and industrial concentration of the pig industry have increased, which has led to the adjustment of production capacity. There is no continuous, sharp and transitional decline in sows in the previous rounds of “pig cycles”, which has smoothed the fluctuation of pig prices in the later period.
Prevent production ups and downs
Improve the protection mechanism of the pig breeding market
Pork is an important commodity for people’s livelihood. In response to the new round of “pig cycle”, the official department emphasizes macro-control of production capacity. At the end of July, the Animal Husbandry and Veterinary Bureau of the Ministry of Agriculture and Rural Affairs responded to the recommendation No. 5776 of the Fifth Session of the Thirteenth National People’s Congress, saying that the Ministry of Agriculture and Rural Affairs, together with relevant departments, will continue to strengthen monitoring and early warning, explore the regulation of live pig production capacity, and support enterprises to carry out integrated operations. .
At present, 12,000 national and provincial pig production capacity control bases have been established and announced across the country, and their pig production accounts for 1/3 of the country’s total.
In recent years, the Ministry of Agriculture and Rural Affairs has guided pig breeding enterprises to expand into slaughtering, processing, cold chain distribution and other fields, reduce intermediate links, and gradually improve the ability to stabilize production and supply. There are 425 meat production enterprises that have built their own farms, and 469 breeding enterprises. Self-built slaughterhouse.
According to the “Implementation Plan for the Control of Live Pig Production Capacity (Interim)” issued by the Ministry of Agriculture and Rural Affairs, during the “14th Five-Year Plan” period, the production data of the national pork production in normal years when the output is 55 million tons will be used as a reference to set the control target for the number of reproductive sows. Therefore, the normal population of reproductive sows is stable at about 41 million, and the minimum population is not less than 37 million.
The pork supply and demand situation has improved, and the national stock of reproductive sows is in a green and reasonable area for production capacity control. According to data from the Ministry of Agriculture and Rural Affairs, as of the end of June 2022, there were 42.77 million breeding sows nationwide, equivalent to 104.3% of the normal population of 41 million. In the first half of 2022, pork production was 29.39 million tons, a year-on-year increase of 8.2%.
“Each round of the pig cycle will lead to the withdrawal of free-range farmers and the improvement of the level of scale. After the last round of pig cycle, the difference from the past is that the proportion of the slaughter of moderately large-scale family farms has increased significantly, and the annual slaughter of a moderate scale of around 3,000 heads The farm is developing rapidly.” Zhu Zengyong said.
In addition to the regulation from the production capacity side, in order to curb the ups and downs of the market, the development and reform department has led the regulation of pork reserves many times in recent years. (For details, see Nandu’s previous report, “The market is reluctant to sell pigs, and the development and reform department is studying the launch of reserve meat”)
The aforementioned Everbright Securities research report judged that from the second half of 2022 to the beginning of 2023, the pig price is expected to be in the upward channel, but the rising market has entered the middle and late stages. There is a possibility of further rise in pig prices. However, since May, the stock of fertile sows across the country has rebounded for two consecutive months, which indicates that the process of reducing production capacity of live pigs started in July last year has been suspended, and the policy of stabilizing pig prices has intervened early, and the policy “ceiling” may limit the increase in pig prices. . The research report predicts that the subsequent upside of pig prices will be narrowed to within 30%.
In Guangzhou, where “pork is delicious”, the rise and fall of pork has attracted public attention. According to the latest data from the Guangzhou Survey Team of the National Bureau of Statistics, in July, Guangzhou’s consumer price index (CPI) remained flat month-on-month. Among them, due to the superposition of factors such as the central frozen meat purchase and storage policy, the Guangdong live pig restriction policy, and the tight supply caused by some businesses’ “secondary fattening” to absorb and stock up, pork prices rose by 11.6% month-on-month.
Source: Official website of the Ministry of Agriculture and Rural Affairs
On August 16, according to the joint monitoring by the Information Center of the Ministry of Agriculture and Rural Affairs and Shandong Zhuochuang Information Co., Ltd., in the 32nd week of 2022 (ie, August 8-August 12), 16 provinces (municipalities) lean meat type white striped pork. The weekly average of the ex-factory price index was 27.42 yuan per kilogram, down 2.2% month-on-month and up 32.2% year-on-year. Among them, the average weekly price of Guangdong pork is 29.83 yuan per kilogram.
Written by: Reporter Huang ShulunReturn to Sohu, see more