Pork prices continue to fall, causing concern

China-Singapore Jingwei Client, June 30 (Song Yafen) Recently, the price of pork, which had previously fallen below the cost line, began to oscillate and rebound, and hog futures also closed up for many consecutive days. However, according to the joint monitoring of the Information Center of the Ministry of Agriculture and Rural Affairs and Shandong Zhuochuang Information Co., Ltd., the current pork price is still falling on a week-on-week basis. In the 25th week of 2021 (that is, from June 21 to June 25, 2021), the weekly average of the total ex-factory price index of lean white pork in 16 provinces (municipalities directly under the Central Government) is 17.36 yuan per kilogram, a decrease of 7.8% from the previous month and from the same period last year. It fell by 62.3%, an increase of 4.2 percentage points from last week.

The National Development and Reform Commission warned pork prices twice within half a month

The continuous decline in pork prices has long attracted the attention of relevant departments. The National Development and Reform Commission stated on June 28 that from June 21 to 25, the national average pig-to-food ratio was 4.90:1. In accordance with the “Preplan for Improving the Government Pork Reserve Regulation Mechanism and Doing a Good Job in Maintaining Supply and Stabilizing Prices in the Pork Market” (hereinafter referred to as the “Preplan”) jointly issued by the National Development and Reform Commission, the Ministry of Finance, the Ministry of Agriculture and Rural Affairs, the Ministry of Commerce, the State Administration of Market Supervision and other departments , Has entered the first-level warning range of excessive decline (less than 5:1), and the central and local governments will start the work of purchasing and storing pork reserves.

On June 16, the National Development and Reform Commission just issued a three-level warning of excessive pork prices.

The three-level early warning mechanism was proposed by the National Development and Reform Commission in the “Preplan” issued on June 9. Together with reserve adjustment and policy coordination, it can better alleviate the cyclical fluctuations in the price of live pigs and pork, and consolidate the supply of pork in the pork market. basis.

How long can pork prices pick up?

Can this wave of pork prices continue? Is it a short-term bottoming out or a turning point in the pig cycle?

Haitong International Research Report pointed out that the rebound in domestic live pig prices is a stabilization and rebound after a rapid decline since May, and it is predicted that pork prices may maintain an upward trend in the short term.

The Pacific Securities Research Report also pointed out that the increase in pork prices is a rapid rebound after falling below the cost line. The supply gap caused by the African swine fever epidemic that lasted for several months in winter may be reflected in the third quarter, when pig prices are expected to continue to rebound.

Zhou Sha, chief analyst of agriculture, forestry, animal husbandry and fishery of West China Securities, also said in an interview with Sino-Singapore Jingwei Client that this round of pork price rise should be an oversold rebound, because it has fallen too much before and has fallen below the cost line of the entire industry. Therefore, it is normal to see an increase, at least first to near the cost line.

However, Zhou Sha believes that it may be too early to talk about the inflection point of the pig cycle. “This rebound should still last for a while, and it may last until August and September. But I don’t think the turning point of the big cycle has come, and I think the big trend may still be downward.”

Zheng Fengtian, deputy dean of the School of Agriculture and Rural Development of Renmin University of China, said that the pick-up of pork prices is not unrelated to policy guidance. Whether it is an inflection point or not is still uncertain, but the possibility that pork prices will continue to fall sharply is relatively small. The greater chance is to oscillate within a certain range.

The National Development and Reform Commission stated in early June that as of the end of April this year, the stock of reproductive sows in the country had returned to 97.6% of the normal year. The relevant parties expect that the number of pigs for slaughter in the second half of this year is expected to return to the normal level. As production capacity continues to recover, prices of live pigs and pork are expected to continue to return to a reasonable level. (Zhongxin Jingwei APP)

All rights reserved by Sino-Singapore Jingwei. Without written authorization, no unit or individual may reprint, extract or use it in other ways.