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光大证券:市场供强需弱的基本面仍未改变 猪价短期内难见大幅反弹

Everbright Securities: The fundamentals of strong market supply and weak demand have not changed, and it is difficult to see a sharp rebound in pig prices in the short term

Zhitong Finance ·  11/28/2023 11:13

Storage will not change the fundamentals of strong supply and demand, and weak fundamentals, and the removal of production capacity will continue.

The Zhitong Finance app learned that according to a research report published by Everbright Securities, according to data from SogPig Network, after the release of storage information on November 24, the national average pig price dropped from 14.84 yuan/kg to 14.53 yuan/kg on November 25, and market pessimism remained unchanged. Looking ahead to the market, the fundamentals of strong supply and weak demand in the market remain unchanged. Considering that the large-scale market in the fourth quarter entered a sprint period, and the number of commercial pigs increased, the current supply of pigs is still at a high level. It is difficult to see a sharp rebound in pig prices in the short term. Only the implementation of a recovery in consumption can strongly support subsequent pig price performance.

The views of Everbright Securities are as follows:

Pig prices remain volatile, and pig collection and storage begins

According to Boya Hexun, on November 24, the price of pigs was 14.65 yuan/kg, +0.27% from week to week, and the price of 15 kg piglets was 19.78 yuan/kg, +4.49% week over week. According to data from Yongyi Consulting, the average weight of pigs released this week was 123.79 kg (123.21 kg last week). On the demand side, temperatures in the southern region are high, and there are still no conditions for large-scale pickling, but due to the impact of a new round of cold waves, consumption expectations are expected to gradually materialize. Looking at the supply side, heavy-weight pigs have been released one after another, increasing the overall average weight, and easing the supply of fat pigs. Since the price ratio of pig food has continued to fall below 6.0 for three weeks, triggering a Level 2 warning of excessive decline, the National Development and Reform Commission announced on November 24 to launch the third batch of central pork reserve collection and storage work during the year. Storage is expected to boost market confidence and underpin pig prices, but given the continued pattern of strong supply and demand and the small scale of storage, it is difficult to see a sharp rebound in pig prices in the short term. The volatile market under the supply and demand game was still the main tone of the fourth quarter.

Storage during peak season supports pig prices

Storage is basically concentrated in the low season of the market from March to July, but storage during this peak season is rare. This also shows that there is currently a serious oversupply of pigs, and market prices continue to be sluggish. The peak season slump is extremely obvious, impacting market confidence and may lead to an accelerated decline in pig prices. Looking back at the historical storage situation, there have also been peak storage seasons in July 2021 and July 2023. Among them, the market in July 2021 is very similar to the present: as the peak consumption season approaches, the concentrated release of pigs in the early stages has triggered a serious imbalance between supply and demand. Under the weak peak season, panic has prompted large-scale sell-offs. Although the collection and storage policy was initiated in a timely manner at the time, it was not possible to stop the continuous decline in pig prices from July to October 2021. Therefore, the current collection and storage plays a more trusteeship role in slowing down the decline in pig prices and boosting industry expectations, and preventing extreme prices from causing stampede. However, since storage volume is still limited compared to total market demand, it is impossible to fundamentally change the supply and demand pattern in the pork market, and it is impossible to reverse the market direction for the time being.

Storage will not change strong supply and demand, weak fundamentals, and the removal of production capacity will continue

Judging from actual data, after the release of storage information, there was no significant recovery in pig prices. According to data from Search Pig Network, after the release of storage information on November 24, the national average pig price dropped from 14.84 yuan/kg to 14.53 yuan/kg on November 25, and market pessimism remained the same. Looking ahead to the market, the fundamentals of strong supply and weak demand in the market remain unchanged. Considering that the large-scale market in the fourth quarter entered a sprint period, and the number of commercial pigs increased, the current supply of pigs is still at a high level. It is difficult to see a sharp rebound in pig prices in the short term. Only the implementation of a recovery in consumption can strongly support subsequent pig price performance. Looking at the demand side, since both the Dragon Boat Festival and the Mid-Autumn Festival and the National Day are showing poor peak seasons, if pickling performance at the end of the year falls short of expectations, large-scale sell-off under panic will be inevitable. At that time, the sharp decline in pig prices will further accelerate the removal of production capacity and trigger a reversal of the cycle.

Risk analysis: Prices of livestock and poultry products fell short of expectations; large-scale outbreaks of livestock and poultry outbreaks; raw material prices fluctuated greatly.

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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