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06

2022

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08

Analysis of Pigs in Q3 China

Source:

According to the latest data released by the #MARA, in Jun 2022, the number of #breeding #sows was 42.77 million, an increase of 2.2% MOM and a decrease of 6.3% YOY.

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According to the latest data released by the MARA, in Jun 2022, the number of breeding sows was 42.77 million, an increase of 2.2% MOM and a decrease of 6.3% YOY.

According to this calculation, it is concluded that the number of commercial pigs sold in Sept 2022 decreased to the lowest value, and then rebounded slightly, with the overall level slightly higher. The estimated output of big pigs showed that it decreased MOM in the third quarter, and the increase in Q4 was limited. The contraction of supply was the main driving force for the industry to be optimistic about the pig price in the second half of the year.
 
In terms of consumption, due to the impact of COVID-19, the consumption level of live pigs in the first quarter of 2022 is generally low, which has a very limited role in supporting and driving the price of livepigs. According to the data of the National Bureau of statistics, after excluding the inflation factor, the total revenue of catering in Q1 2022 will only account for 80.40% of that in the same period of 2021; The catering consumption income in Q2 increased significantly. After excluding the price factor, the income in the second quarter accounted for 92.81% of the same period in 2021. Catering income mainly reflects the social consumption capacity of live pigs, which indicates that the social consumption of live pigs in Q2 2022 has increased significantly compared with Q1, but it has not yet returned to the normal level.
 
From early Mar to early Jun 2022, China statereserve issued 13 batches of 16 storage notices, with a planned total storage volume of 518,000 tons. In the middle and late Jun, the supply of pigs gradually transited from loose to tight balance. In addition, the breeding enterprises' bullish pressure and secondary fattening increased the shortage of pigs, promoted the continuous and rapid rise of pig prices, and the ratio of pigs to grain climbed to the third level warning range. The optimism of the industry was cooled down under the guidance of the policy. After that, the pig price continued to fall, and the industrial sentiment further turned to pessimistic.
 
We continue to be bullish on the pig price, but the consumption increase in Q3 was limited, the policy guidance was under pressure, the industry was conservative, and the room for pig price increase was limited. In Aug and Sept, the number of slaughters decreased while the consumption increased slightly. The pig price is expected to rise steadily. The quarterly pig price is temporarily seen to be 23-24 yuan / kg.