With the gradual stabilization and rebound of domestic pig slaughter prices in March, the loss situation of the breeding industry has been significantly improved. This change undoubtedly brings a ray of hope to the pig industry, which has been under pressure recently. In this context, not only the number of pigs slaughtered has rebounded, but also the operating conditions of related enterprises have improved. This article will provide an in-depth analysis of the current situation in the hog market and discuss future development trends.
First of all, judging from the recent market data, an upward trend in hog prices has formed. According to the sales briefings of Dawnrays and Shennong Group, the sales volume and sales revenue of the two companies in March have increased significantly. The sales revenue of Dawnrays increased by 32.72% month-on-month, while the sales volume of Shennong Group increased by 42.23% year-on-year. These figures show that market demand is recovering and farmers' confidence is growing.
Behind the rise in market prices is a combination of factors. On the one hand, piglet prices have risen due to seasonal replenishment demand and winter losses, which have supported hog prices. On the other hand, the movement of the futures market also reflects the market's expectation of future prices. The main hog futures contract 2409 rose by 3.25% in a single day on April 3, showing the market's optimism about hog prices.
However, despite the signs of recovery in the market in the short term, we should also see that supply-side pressures remain. Hualong Futures' analysis pointed out that the supply-side pressure will continue to exist in the next few months, and the high inventory of frozen products and the losses of slaughtering companies are problems that cannot be ignored. These issues could weigh on pig prices, leading to market volatility.
Looking at long-term trends, data from the Ministry of Agriculture and Rural Affairs gives us some clues. The month-on-month increase in the pig inventory and the decrease in the number of fertile sows in December 2023 bode well for a possible easing of market supply in the future. ITG Futures believes that the current round of reproduction sow removal cycle has been degraded by 8%, almost equaling the depletion range of the previous cycle. This means that the supply pressure in the market is expected to ease in the future, thereby supporting the rise in hog prices.
In addition, we also need to pay attention to factors such as holiday stocking, changes in terminal consumption, admission of secondary fattening groups, and capacity reduction. All of these factors can have an important impact on hog prices. For example, the Qingming holiday did not significantly increase the demand for live pig market, indicating that traditional festivals have limited effect on boosting consumption. Therefore, we need to pay close attention to the consumption of other holidays in order to predict market trends more accurately.
On the whole, hog prices may remain weak and volatile in the short term, but the downside should be limited. In the medium to long term, as supply pressures ease and market sentiment improves, hog prices are expected to remain strong. This is undoubtedly a positive sign for investors. In the future investment, we need to pay close attention to the market dynamics and make a reasonable layout to grasp the investment opportunities brought by the development of the industry.
In short, the current recovery of the pig market has brought hope to the industry, but we should also be aware of the potential risks. Through in-depth analysis of market data and industry trends, we can better grasp the direction of investment and achieve solid investment returns.