The winter solstice has passed, preparations for the Spring Festival continue, and pig prices are still fluctuating at the bottom. Pig prices are not strong during the peak season, production capacity continues to decline, and the cycle reversal is getting closer.
The Zhitong Finance App learned that Guotai Junan Securities released a research report saying that according to monitoring data from the Ministry of Agriculture and Rural Affairs, the number of sows that can be raised nationwide at the end of November was 41.58 million, down 1.2% from the previous month, or 101.4% of the normal holding of 41 million heads. It has been declining for 11 consecutive months. The winter solstice has passed, preparations for the Spring Festival continue, and pig prices are still fluctuating at the bottom. Pig prices are not strong during the peak season, production capacity continues to decline, and the cycle reversal is getting closer.
Guotai Junan's main views are as follows:
The peak season for pig prices is difficult, and farming sentiment is pessimistic. The winter solstice has passed, preparations for the Spring Festival continue, and pig prices are still fluctuating at the bottom. On the supply side, in terms of weight, the overall average sales weight increased. Structurally, the share of listings under 90 kg dropped to 6.41%, and the share of sales over 150 kg rose to 7.53%. The impact of early sales weakened, the pace of big pigs leading the weight trend, and supply pressure was increasing; at the demand level, even though there was a marked increase in wholesale market sales after entering the peak season, overall demand is still weak, and the fertilizer standard gap continues to narrow. We believe that as the supply of large pigs is gradually released, pig prices will continue to be under pressure, making it difficult to thrive during the peak season.
The rate of decline in production capacity is accelerating. Third-party monitoring data from November showed that the rate of loss of production capacity continued to accelerate, and the decline in production capacity in November was the highest decline since 11 months in 2023. We believe that the accelerated decline in production capacity means accelerated elimination of sows, pessimistic industry farming sentiment, and gradual increase in balance ratio pressure. Even if short-term pig price increases and falls are uncertain, due to restrictions on profit sheets and balance sheets, pessimism continues. The trend of continuing to accelerate production capacity decline is certain, and the rate of decline in production capacity will further accelerate.
Risk warning: epidemic risk, livestock price fluctuation risk, raw material price fluctuation risk, etc.