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生猪行业专家交流纪要:资金紧张导致指数销售困难 预计中小散户产能去化幅度至少在40%以上

Minutes of exchange between experts in the pig industry: Index sales difficulties due to financial constraints are expected to be reduced by at least 40% of the production capacity of small to medium retail investors

Zhitong Finance ·  10/11/2023 07:15

The Zhitong Finance App learned that recently, the Minutes Private Circle published the minutes of exchanges between experts in the pig industry. According to the minutes, according to the current decline in payment prices and the index, the trend of removing pig production capacity will continue to decline. The capital of many companies is tight, making it difficult to sell indices. This may cause small to medium retail investors to be relatively weak in purchasing breeding pigs and indices.

From the perspective of aquaculture enterprises, there is currently serious differentiation in the aquaculture production capacity of large enterprises and other enterprises. Large group companies account for relatively high sow production capacity, while small to medium retail households have lower sow sales, with a year-on-year decline of between 50% and 70%. Considering the decline in the same period last year, plus the decline in sow sales in the first 8 months of this year, it is estimated that the production capacity of small to medium retail investors will also be reduced by at least 40%.

On the supply side, the current overall supply is generally normal, but there are some unusual factors. For example, undigested stocks in the fourth quarter of 2022 were handed over to 2023, with at least 1.7 million tons of meat. If you add about 1.4 to 1.5 million tons of imported frozen meat, the overall supply could create an oversupply situation.

Overall, pork production capacity has been showing a downward trend since 2020. Although there was a rebound in the middle, production capacity continued to decline in 2022. Overall, this year is a year of capacity removal, and it is likely that production capacity will continue to be removed in 2023.

Q&A

Q: Will the removal of pig production capacity continue?

A: According to data, 3.7 million tons of meat were imported in 2021, and there are still more than 4 million tons of backward meat. It was digested quite a bit in 2021, but it may not have been fully digested yet. Furthermore, there was a surplus of supply in the first quarter of 2022, so early production capacity was not fully digested. As a result, the current pig production capacity is relatively high. However, it is important to note that prices for the first half of this year were not ideal, and have not been good since June. Although there was a certain rebound in November and December, there was not much consumption before January. Coupled with oversupply in the month of 2022 and other factors, consumer demand is likely to be low this year. So, overall, the extent of the oversupply of pigs is likely to be greater than expected.

Q: What impact does excess pig production capacity have on corporate profits?

A: The trend in the next few months will mainly depend on the profitability of companies and their ability to supplement capital flows, as well as the extent to which fat pig prices will rebound. If the rebound in fat pig prices is not strong enough, companies may continue to lose money. Furthermore, the price of dead pigs may not improve in the short term because of the current oversupply and pessimistic expectations for the future. Therefore, in the current situation, companies may focus on futures trading, mainly long-month contracts, which is also reflected in the current slump in futures prices. For enterprises, the current degree of removal of pig production capacity is not particularly high, but they also need to pay attention to their profit status and financial support.

Q: What is the current consumption environment?

A: Although we have seen an increase in wholesale volume, consumption other than this is actually not optimistic because it is related to the general economic environment, such as large-scale unemployment, reduced income for migrant workers, real estate, etc. Industries such as infrastructure and real estate are actually one of the main consumers of pork. Although statistics are not possible, it is obvious that the income of consumers of this type of physical activity can often support the consumption of two or three people, while the income of this type of consumer has dropped quite a bit. As a result, this year's consumption situation is likely to be poor.

Q: What is the current pig inventory situation?

A: After April 2022, the amount of inventory that needs to be digested is likely to exceed 3 million tons. However, it is important to note that there may also be some smuggled animals among them, which will also put some pressure on inventory. Furthermore, the amount of frozen meat imported has increased by about 10% compared to the same period last year, indicating that there may be a certain oversupply of meat.

Q: How well does pig production capacity match supply and demand?

A: Judging from supply, pig production capacity is not particularly excessive. There may be some excess, but it's not that serious. As can be seen, despite the decline in slaughter volume, sales of Zhongshan beef are still weak, indicating that market space is being compressed, and it is difficult for sales prices to rise. As a result, overall, the pressure on pig production capacity is likely to be less than expected. Summary: According to expert speeches, there may be a certain degree of excess pig production capacity, but overall it is not serious. Future development depends on the profitability and financial support of companies, as well as the rebound in fat pig prices. The current consumption situation is relatively poor, and may be affected by factors such as the economic environment. Also, the inventory is large and needs to be digested after April. Although there is an oversupply situation, pig production capacity does not fully match the extent of the surplus.

Q: The supply for the first half of this year is slightly larger than the supply for the first half of this year, which may cause poor prices. Will pigs be released as early as possible?

A: The supply for the first half of this year is slightly larger than the supply for the first half of this year. This may cause poor prices, and pigs will be released as early as possible.

Q: The sample data you see now is still declining, and the production capacity gap may be slightly larger than in August. Do you think the reduction in production capacity is significant?

A: The sample data we see now is still declining. The production capacity gap may be slightly larger than in August, and production capacity has been greatly reduced.

Q: There is a lot of financial pressure on large companies, which may lead to the removal of sows very much?

A: There is a lot of financial pressure on large companies, which may lead to the removal of sows very much.

Q: If the price rebound in the future is not strong, the production capacity gap is likely to fall short until March and April next year?

A: If the price rebound in the future is not strong, the production capacity gap is likely to fall short until March and April of next year.

Q: Across the board, the extent of removal of production capacity is likely to be quite large?

A: Across the board, the extent of loss of production capacity is likely to be significant.

Q: The density of removal of production capacity is likely to be relatively high, which will lead to further weakening of prices?

A: The density of removal of production capacity is likely to be high, which will lead to further weakening of prices.

Q: For Fujian, the removal of production capacity may not be too large?

A: For Fujian, the removal of production capacity may not be too large.

Q: Are you mainly concerned about the removal of production capacity in the two major production areas of East China and Southwest China?

A: The main focus is on the removal of production capacity in the two major production areas of East China and Southwest China.

Q: Expectations are declining. Will capacity removal increase in October-November?

A: Expectations are declining, and the extent of loss of production capacity will increase in October-November.

Q: Regarding the removal of pig production capacity, what impact do you think the strength of the price rebound will have on the industry? If the price is below 18 yuan, will production capacity continue to be removed? If it reaches 19-20 yuan or more, will it stop draining production capacity?

A: Looking at it now, I think the price rebound in the future is likely to be below 18 yuan. If the average monthly price in November were between 17 and 18 yuan, it might be considered a normal disappointment, but it really exceeded expectations. In this case, the amount of capacity removal may exceed expectations.

Q: Regarding the price trend in October, do you think there will be a big rebound? As well as the question of the price difference between big fat pigs and fat pigs.

A: It is difficult to see a big rebound in October. At most, there will only be a weak rebound after bottoming out, because currently the price of big fat pigs is still relatively good. Big fat pigs over 130 kg are still above 17 units, so the price difference will widen. Moreover, at present, it seems that many people do not have a strong desire to buy fat pigs, because the price difference between the tender and the fat pig is not that big. However, this situation will soon change, especially in mid-late October. If the pressure situation recurs again, supply will be tight later. Therefore, generally speaking, November and December should be a period of weak rebound, and the strength of the rebound is difficult to predict.

Q: Regarding the effort to remove production capacity, do you think the fourth quarter will be a bit larger than the third quarter?

A: Based on the current situation, I think the removal of production capacity in the fourth quarter may be more intense than in the third quarter. In the current situation, if we add production in Suzhou, the effort to remove production capacity may be a weak rebound situation. According to estimates, by April, we should have kept more than 3 million tons of animals. By September, it is said that about 30% had been destroyed. If 1/3 is removed, it is estimated that the storage volume will still be more than 2 million tons.

Q: What are the current cash flow costs for large-scale retail investors?

A: The cash flow scale market for retail investors is around 16, around 16. This is all a normal state. If you add depreciation costs, you can basically think of it as 16 yuan 57. The cost for small retail investors is actually a little lower than 16, but you need to consider the proportion of small retail investors. Overall, the cost for retail investors should also be above 16, so overall this cost can rise to between 16 and 17.

Q: It's been almost two months, and both sow feed and piglet feed are real. This is contrary to the trend of removing production capacity. Is it possible that actual production capacity will be reduced even less?

A: The actual reduction in production capacity is relatively small. Overall, it is only 3 to 5 points. The magnitude of sows is slightly larger than that of feed, but in reality, the magnitude is not that large. This is due to changes in the production efficiency of sows. Currently, sows are updated more frequently than before, and breeding sows account for a significantly higher proportion of turns than before, so although the amount of land has declined slightly, the decline in residual value has not been that large. Overall, the ability to supply fat pigs has not declined too much. Currently, production capacity needs to be further adjusted to obtain better prices.

Q: Is there excess pig production capacity now?

A: Currently, there is not much excess pig production capacity; it has not yet reached the level of excess. We need to consider the impact of current operating inventory on production capacity, which will affect the real judgment on production capacity.

Q: Teacher Zhang, what level of frozen products do you think would be a normal approach?

A: Lowering the level of frozen products to 100,000 to 150,000 tons is a normal route. Currently, the import volume is around 100,000 tons. If you look at it from an annual perspective, the viscosity import volume between 100 and 15.45 million tons may be considered quite normal. Inventory that has a particularly significant impact on prices should reach more than 3 million tons.

Q: What is the current profit situation in the aquaculture industry?

A: The aquaculture industry is likely to lose money under current pressure, particularly if imports are compressed by more than 300,000 tons in 2021. Listed companies all lost more than 450,000 yuan in investment. If the overall import pressure exceeds 2 million tons, it may have a big impact on the aquaculture industry.

Q: Is there still room for improvement in sow production efficiency?

A: The production efficiency of sows reached its highest point in the second half of 2022. It will be affected by the disease environment starting in 2023, and will not increase much. The number of live sows was particularly high in the second half of '22, but due to the impact of the disease environment, the death rate of sows is currently high, so there may be no room for an overall increase. The index mortality rate is significantly higher than in normal years, so there is limited room for improving sow production efficiency.

Q: If pig production capacity drops another four or five points, will reserve sows be replenished quickly?

A: If pig production capacity drops by another four or five points, reserve sows will be replenished very quickly. Judging from the current capacity utilization rate of only 40 percent, the ability to supplement reserve sows is quite strong; the key is whether the enterprise has the will and ability to do so.

Q: Will the current production capacity removal process be a little bigger than we thought?

A: Yes, in the current situation, the process of removing pig production capacity may be a bit bigger than we think. The debt ratio is high, pig prices continue to be weak, and price expectations until May next year are not high, leading to a stage of production capacity removal.

Q: Recently, more sows of gestational age have been eliminated. Has this improved production efficiency to a certain extent?

A: Yes, more sows of gestational age have been eliminated recently, which will improve production efficiency to a certain extent. The quality of new normal sows is more optimized than the overall quality, so the overall welfare production efficiency will remain in a relatively good position.

Q: Will the removal of pig production capacity reduce costs?

A: In order to reduce costs, the large-scale market will adjust the production capacity structure in case of oversupply. Standards for eliminating sows may be raised, but production efficiency has reached a relatively optimized state and is moving towards a stable stage.

Q: In the process of removing pig production capacity, will supply capacity be affected?

A: In the process of removing pig production capacity, supply capacity will be affected to a certain extent. The large-scale market will adjust the structure of eliminating sows, but the supply capacity is still considering its supply capacity and will enter a stable stage.

Q: In the process of removing pig production capacity, will there be insufficient momentum?

A: In the seven-eight-month adjustment phase, the large-scale market will leave sows with sufficient momentum. Therefore, in the process of removing production capacity, there should be no shortage of momentum.

Disclaimer: This content is for informational and educational purposes only and does not constitute a recommendation or endorsement of any specific investment or investment strategy. Read more
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