Pork, as the largest meat consumer product in mainland China, its price fluctuations have attracted much attention. Although the Spring Festival has recently approached, but the price of pork has been explored one after another, the rise in pig prices in the peak consumption season in previous years has not been in the limelight for a while, in 2022, can pig prices be reversed? This article will explore the answer from the perspective of the law of the change of the previous pig cycle.
Review of previous "pig cycles"
When it comes to pig price fluctuations, the pig cycle is always a hurdle that cannot be bypassed. The pig cycle is a phenomenon of cyclical fluctuations in pork prices in the process of pork production and consumption, and the fundamental reason for the pig cycle is the mismatch between pig supply and demand.
To put it simply, when the price of pigs rises, the profits of pig breeding are better, the enthusiasm of the breeding end is improved, the corresponding sow stock increases, the supply of pork will increase after a period of time, the supply and demand pattern will also change into oversupply, which in turn will promote the decline in pig prices, and then the breeding profits will decrease, the enthusiasm for the breeding end will continue to decrease, the number of sows will decrease, the supply of pigs will decrease after a corresponding period of time, the supply and demand pattern will gradually change from the original oversupply to short supply, and the price of pigs will rise again. It's a cycle that goes on and on.
A full pig cycle
Through the statistics of the previous pig cycle, it is found that generally every 4 years or so is a pig cycle, of which the pig price is mostly in the upward channel for about one year, the overall trend of about two years is in the downward channel, and the time is at the bottom of the shock.
Since 2006, there have been 4 more violent pig cycles in the domestic pork market, and the emergence and fluctuation of each pig cycle have been affected by the endogenous factors of the pig cycle, and will also be affected by factors such as epidemics and policies.
The first pig cycle occurred in 2006 ~ 2009, mainly due to the pig breeding industry in November 2006 serious pig blue ear disease, resulting in a rapid decline in the number of breeding sows, promoting the rise in pig prices in 2007, the highest point reached 17.45 yuan / kg, with the recovery of pig production capacity, in 2008 pig prices began to fall continuously, the lowest point fell to 8.98 yuan / kg, the entire pig cycle lasted 33 months.
The second pig cycle occurred in 2019 ~ 2014, the key event is the occurrence of infectious diarrhea disease in the winter of 2010 and the spring of 2011, due to the relatively backward treatment methods at that time, the use of antibiotics and other drugs treatment effect is not ideal, piglet damage is more serious, from the second half of 2011, pig prices continue to rise, the highest price reached 19.92 yuan / kg, with the breakthrough of prevention and control technology, production capacity recovery, pig prices fell again, the lowest point fell to 10.45 yuan / kilograms, which lasted 59 months.
The third pig cycle occurred in 2014-1018, mainly driven by environmental protection of pig supply-side reforms. From 2014 to 2015, the environmental protection of pigs was tightened, and small and medium-sized farmers who did not meet the environmental protection standards were forced to withdraw, and the stock of fertile sows gradually declined, driving the price of pigs upward, and the highest point reached 20.92 yuan / kg. Although in 2016-2017, the number of fertile sows is declining, and the price of pigs is also declining, the main reason is that due to the withdrawal process of small and medium-sized farmers in 2014-2015, some relatively large-scale pig farms took the opportunity to expand, and the number of sows that can be produced by large-scale pig farms has increased significantly, and the supply of pork has not declined, so the price of pigs has declined, which lasted 49 months.
The fourth round is 18 years so far, and the current round of pig cycle we are experiencing is the one that everyone is familiar with and the most volatile. The key event was the outbreak of non-plague in September 2017, which led to a significant reduction in the number of fertile sows and pigs, and in August and September 2019, the number of fertile sows and pigs decreased by about 40% year-on-year, directly promoting the price of pigs in 2019 to a record high of 40.98 yuan / kg. With the recovery of pig production and the increase in the amount of imported pork, in the later period, although affected by seasonal consumption and epidemics and other factors, pig prices have also risen, but they have never exceeded the historical high, and the decline in pig prices has shown a shock downward trend. By the end of 2020, as pig production capacity gradually returned to normal years, pig prices began to decline significantly after the Spring Festival, and it can be said that throughout 2021, pig prices as a whole are in a downward channel.
With the decline in pig prices, pork prices showed the same downward trend, and in 2021, pork prices consolidated after the shock fell, with an average annual price of 25.71 yuan / kg. As of January 18, 2022, the average price of pork in the country was 18.49 yuan / kg, a decrease of 63.65% from the high point in 2020 and a year-on-year decrease of 60.20%.
Compared with the same period in previous years, the price fluctuation range from January 29 to February 10, 2021 (from the 17th to the Chinese New Year's Eve of the waxing moon) was 3.20 yuan / kg, and the overall trend was in a volatile downward trend. Affected by upstream products, the market supply is strong and the demand is weak, and the low price of pork also affects the price reduction sentiment of slaughtering enterprises, and the price of pork and the price of pigs form a mutual restriction. Only from the historical cycle, pork prices have little room for pre-holiday or increase.
Analyze the trend of pig prices from the supply and demand level
From the supply point of view, due to the sharp decline in the market pig source due to the early non-plague, with the introduction of a series of favorable policies, the stimulation of breeding end supplementation, production capacity expansion speed accelerated. According to the latest data released by the National Bureau of Statistics, in 2021, the national pig output exceeded 670 million heads, and the annual pork production reached 52.96 million tons, an increase of 27.4% and 28.8% respectively compared with the previous year. As of the end of the year, the pig inventory was 449.22 million heads, according to estimates, the number of sows that could breed at the end of the year was about 43.27 million, and the market pig source and pork were relatively abundant.
After entering the winter, although there are sporadic epidemics, the overall prevention and control is preventable and controllable, and there is no trend impact on the supply of live pigs. As the breeding end as a whole is not optimistic about the market in the first half of 2022, near the Spring Festival, the scale of farm out of the pen plan increased significantly, the overall price resistance mentality of the breeding end weakened, and there was a phenomenon of weight reduction and early release, and the market small weight pig source continued to increase. Therefore, in general, the supply of live pigs and pork before the Spring Festival is relatively sufficient.
From the demand side, according to the pig early warning monitoring system, as of January 10, the slaughtering enterprise fresh sales rate of 93.28%, an increase of 3.6% year-on-year, under the concern for the future market, the enthusiasm of slaughtering enterprises to enter the warehouse is not high, the frozen product storage capacity shows a continuous downward trend, and the overall market demand is difficult to improve significantly.
Is the price of pigs rising or falling around the Spring Festival?
Looking at the previous pig cycle, the pig price of one month before and after the Spring Festival can be said to be the basis of the annual pig price, which only rises when the supply exceeds the top, and in other periods, it is mainly down, and the price fluctuation space at the top is weaker than the fluctuation in the bottom cycle. The performance of the peak season of consumption and stocking before the Spring Festival basically laid the trend of pig prices in the post-holiday year.
From the current pig production capacity situation, 2022 is in the downward cycle year that is about to bottom out, and the pattern of oversupply of pigs is difficult to fundamentally change, and the peak consumption season still overlaps with the concentrated output of the breeding end. Comprehensive transformation of the supply and demand pattern of the previous pig cycle and the performance of pig prices, it is difficult for the price of pigs to rise in the peak season before the Spring Festival in 2022, and the rising market expected by the breeding end may be difficult to achieve, even if there is a rebound market, the amplitude will not be too large. The decline in pig prices after the Spring Festival is still a high-probability event, but the decline will be less than in 2021, and it is expected to be within 10%.
In short, the supply of the pig market in the first half of 2022 is still sufficient, the consumption off-season is difficult to have a significant positive boost to the market, the first half of the pig price or still show a weak operating pattern, the second half of the year into the peak consumption season, the trend or slightly improved.