Prospects for the hog market in 2011

In 2010, the performance of the Chinese hog market was in stark contrast to the macro economy: sluggishness and overheating. The entire first half of the year can be described in terms of vocabulary: plummet, downturn, disappointment, and despair. In February, it continued to plummet in April, and the trough of April to June was low. In April, the government began to purchase 5 consecutive batches of stocks. The market did not improve and continued to slump. Pig farmers were disappointed with the effect of their purchasing and storage policies, and desperate. ......

It was not until mid-June that the pig market began a near-crazy rise of almost 1% per day, but it only lasted for more than 40 days. The hog market has finally come out of losses for up to six months and has made a profit. Balanced Profits After the end of the year, a new round of policy control and swine disease have once again caused the pig market to end in 2010 and fall again when the Spring Festival has another two and a half months...

Will China's hog market continue to fall and lose money again in 2011?

The severity of swine disease in 2010 was significantly higher than in 2009. Since the Ministry of Agriculture announced the outbreak of foot-and-mouth disease in some provinces at the beginning of the year, the regional pig disease has been rising year-round. Especially in the first half of the year, the price of pigs slumped and losses lasted for half a year were directly related to pig diseases that caused pigs to disturb the market.

What needs attention is that different pig diseases have different levels of influence on the market. For example, the impact of the foot-and-mouth disease epidemic at the beginning of the year on the sows was far less than that of the piglets, and the slaughter was accelerated and the pigs were disturbed. Not only led to 4 months of plunge and losses in the past six months, but also led to a strong rebound in pig prices after mid-June, at a rare rate of nearly 1% a day.

Blue-eared disease-based mixed infections can directly inflict heavy losses on the population, leading to the death of a large number of sows, a significant decline in population, and the sow population is the driving force behind the changes in the live pig market. The main driving force behind the soaring price of pigs in 2007 came from severe pig disease that continued from the summer of 2006 to early 2007.

At present, apart from the policy adjustment factors, the fall from the beginning of November 2010 is also one of the main factors.

Since mid-2009, the nation's total hog inventory has finally recovered to an equilibrium level after a large number of sows began to restock in the second half of 2007, and has subsequently shown excess production capacity. However, since the first purchase and storage in June 2009 prevented the price from falling in a timely manner, the excess production capacity was not eliminated at that time. Instead, the local severe pig disease in September-November 2009 led to a decline in the population.

In the beginning of 2010, pig disease and the drastic fall in the price of pigs caused by the disease caused losses. Together, the stock began to decline rapidly. Due to the long-term downturn in the hog market and the high risk of the disease, it contrasts with the macroeconomic overheating and the upswing. Therefore, a large number of small and medium-sized farmers have opted out of the pig industry. And even if the pig market rebounded strongly after August, it did not come back. The persistence of piglet prices reflects this phenomenon.

Although the price of pigs fell again for more than a month under the influence of factors such as storage and pig disease in late November 2010, it is clear that the downside has been very limited. Because the overall population is no longer supporting the oversupply, it is difficult for pig prices to fall below the price of 6 yuan/kg. Moreover, once the impact of the biggest unfavorable factor in swine disease has diminished, the insufficient stocks still support the continued rise in pig prices.

The period from the supplemented sow to the impact of live pig supply and pig price needs a "3 months breeding, 4 months of pregnancy, 5 months of fattening" period of 12 months, that is, "three hundred fifty-five" cycle law.

For example, the increase in the supply of live pigs during the current period comes from an increase in sow stocks 12 months ago. The increase in sow stocks during this 12-month period has not affected the supply of pigs and pig prices. Sows may have stockpiles and The phenomenon of increased synchronization of pig prices. Therefore, it is wrong to judge the current sow population on the basis of the current hog price.

After swine disease led to a significant drop in sow herds in 2006, it was in a rapid recovery phase in 2007 and 2008. However, in mid-2008, the sow population has returned to an equilibrium level and entered surplus. According to the “three-fourth” cycle rule between the sow population and the pig price, in mid-2009, the live pig supply will enter the surplus stage. In the second quarter of 2009, the pig market entered losses on schedule, but the subsequent drop in excess capacity was mainly due to pig disease, rather than elimination caused by losses, because only losses lasting more than two months in 2009 did not result in breaks in the capital chain of the pig farm. There has been no significant culling of sows.

Since mid-2009, swine disease has caused the sow population to gradually shift from above the equilibrium level to below the equilibrium level. At the same time, slaughter and losses caused by swine diseases in the first half of 2010 have further reduced the sow population. Despite the rapid expansion of the scale of pig farms in recent years, it is still difficult to offset the impact of the disease and the risk of disease and small and medium-sized farmers have switched to the overall population.

By the end of 2010, the national sow population level has been lower than the equilibrium level to a certain extent. According to the "three-fourth" cycle law, the supply and demand relationship of live pigs in 2011 is tightly balanced, and the possibility of sustained oversupply is very low, unless Severe swine disease has caused a large number of pigs to disturb the market in special circumstances.

From the above analysis, it can be seen that although pig prices fell again at the end of 2010, the sow population and total stocks were below the equilibrium level, and the downside was very limited. In 2011, hog supply was still slightly nervous. Pig prices are still rising.

Therefore, for medium- and small-scale pig farmers, under the premise of preventing and controlling the risk of disease, the existing structure can be adjusted to increase the amount of slaughter in 2011. To make up for the losses in 2010 and pig disease led to a large number of small and medium-sized households to exit, leaving the market space left. For medium and large-scale pig farms and one-stop enterprises, the structural adjustment of China's hog industry is still proceeding rapidly, and industrial restructuring is a long-term trend. Especially after a large number of small and medium-sized households withdraw, it is a good time to expand.

Tips: Epidemic risk is always greater than market risk! The quality of good corn is a crucial factor that affects the efficiency of the farm.