As an important agricultural product in people's vegetable baskets, pork prices have always attracted much attention.

Up to now, the domestic pig market has risen above expectations, mainly due to the phased increase in market bullish sentiment. Pig data monitoring shows that the average price of foreign three-yuan pigs in the country is about 15.53 yuan/kg, up 0.12 yuan/kg from the previous day.

Get a sneak peek at the 2023 results of listed pig companies

Once again, it's time for major companies to disclose their report cards once a year. Up to now, some pig companies in the A-share market have disclosed forecasts for 2023 results. Let's take a closer look:

Jingji ZhinongIt is expected to achieve net profit of 1.5 billion yuan to 1.7 billion yuan in 2023, an increase of 94.03%-119.90% over the same period of the previous year; net profit after deduction of 1.6 billion yuan to 1.8 billion yuan, an increase of 85.66% to 108.86% over the previous year.

The main reason for the sharp increase in performance during the reporting period compared to the same period of the previous year was a sharp increase in the number of real estate projects delivered by the company compared to the same period last year, and carry-over sales revenue and profit increased sharply accordingly. Meanwhile, as pig prices continue to be sluggish, pig companies generally face greater financial pressure. In the future, as pig prices begin to rise from the bottom up, Jingji Zhinong's breeding profits will be effectively repaired, and the company's profit margin is expected to increase further.

*ST MasakuniThe loss turned into a profit in 2023. Net profit attributable to shareholders of listed companies is expected to be 8 billion yuan to 10 billion yuan, with a loss of 13.387 billion yuan for the same period last year; net profit after deducting non-recurring profit and loss is estimated to be 5 billion yuan to 7 billion yuan, and a loss of 11,543 billion yuan for the same period last year. In 2023, Zhengbang Technology's revenue is estimated at 6 billion yuan to 7 billion yuan, compared to 14.415 billion yuan in the same period last year.

Regarding the 2023 performance change, the company stated that during the performance forecast period, the company's performance increased significantly compared to the same period last year, and net assets were corrected, mainly because the company's restructuring plan had already been implemented. Affected by continued low pig market prices, the pig business lost 3 billion yuan to 4 billion yuan in net profit.

Shin-wutoyoThe net profit loss for 2023 is estimated at 11-1.4 billion yuan, and the loss for the same period last year was 76 million yuan, setting a new loss record since the company went public in 2004. Xinwufeng said that in 2023, the company's pig business developed steadily. The number of pigs released was about 3.2 million, an increase of 75% over the previous year, but pig prices continued to fall, and the company's breeding business profit fell sharply year on year, leading to a loss in performance.

Xiangjia Co., Ltd.The net profit loss is expected to be 115 million yuan to 145 million yuan, turning into a year-on-year loss; the basic loss per share is 0.81 yuan/share - 1.02 yuan/share. The main reason the company expects losses is that markets such as live poultry are sluggish, unit sales prices are lower, and live poultry business losses are large; gross margin of fresh products has declined; and raw material costs have declined slightly, but they are still high.

Overall, domestic pig prices have been hovering at a low level since 2023. According to data from the Ministry of Agriculture and Rural Affairs, in the third week of January 2024, the average price of pigs nationwide was 14.35 yuan/kg, down 9.5% year on year; the average price of pork was 24.22 yuan/kg, down 16.5% year on year. In 2023, the average annual price of pigs nationwide was 15.40 yuan/kg, a year-on-year decrease of 19%.

Due to oversupply, pig prices continue to be sluggish, and market expectations are generally pessimistic. According to data from the National Bureau of Statistics, pork production for the full year of 2023 was 57.94 million tons, an increase of 4.6% over the previous year, the highest level since 2015.

After a special meeting with experts, industry associations, and key enterprises, the Ministry of Agriculture and Rural Affairs also pointed out that in December 2023, the number of medium and large pigs in large-scale pig farms increased by 3.7% year-on-year. These pigs will be released in the next 1-2 months, which indicates that the supply in the pig market is still relatively relaxed, and pig farming is likely to continue to lose money after the Spring Festival.

Start 4 rounds of pork storage within 1 month

On January 25, China Storage Network issued a notice on matters relating to the rotation of frozen pork from the Central Reserve and the delivery of frozen pork from the Central Reserve on January 26, 2024.

The notice indicates that according to the previous rotation and warehousing situation, according to the requirements of equal rotation, 20,000 tons were listed in this rotation outbound auction transaction, subject to the actual listing. Trading hours are January 26, 2024 from 8:30am to 11:30am.

It is worth mentioning that since this year, China Storage Network announced 30,000 tons of warehousing and listing auctions on the 2nd, 10th, 16th, and 19th; on the 2nd, 4th, 10th, 12th, 16th, 23rd, and 26th, it announced the listing of 30,000 tons, 0.33,000 tons, 30,000 tons, 70,000 tons, 30,000 tons, 30,000 tons, 30,000 tons, and 30,000 tons.

Regarding the number of rotating outbound bidding transactions on January 4 and January 12, China Reserve Network stated that it was determined “according to the previous rotation and warehousing situation, and according to equal rotation requirements.”

China Post Securities released a research report stating that production capacity removal is accelerating, and pig prices will improve month-on-month in 2024. On the one hand, under the influence of multiple factors such as poor pig prices during the peak season and the non-plague epidemic, the loss of production capacity in the industry has accelerated markedly since November. According to data from the Ministry of Agriculture and Rural Affairs, the total number of breeding sows dropped by 5.3% from January to November. The November breeding range is already below the low of the previous cycle in April '22; on the other hand, the industry's production capacity will continue to decline in the short term. With continued losses, the risk of a breakdown in the cash flow of highly indebted companies is increasing, and the industry's expectations are generally cautious. Some companies have already lowered their 2024 listing targets.Therefore, it is expected that the industry's supply and demand pattern may improve relatively in 2024. In particular, pig prices will be relatively good in the second half of 2024.

How will pig prices go in the future?

Looking back at 2023, pig production developed steadily. Despite low prices and corporate losses, the overall industrial quality of the pig industry is steadily improving.

Thanks to the Ministry of Agriculture and Rural Affairs's continuous promotion of large-scale and standardized development of China's pig industry in recent years, a number of large modern breeding enterprises have emerged, new varieties, new technologies, and new equipment have been promoted and applied at an accelerated pace, and the level of automation, informatization and intelligence in production has improved markedly. At present, large-scale farms have become the main supplier in the pork market, greatly improving the resilience of enterprises to risks. At the same time, leading companies have been hard at work in the midst of a long bear market in pig prices, and breeding costs have been significantly reduced.

Surveillance by the Ministry of Agriculture and Rural Affairs shows that since October 2023, the number of newborn piglets in the country has declined year on year, which also indicates that production capacity reduction has achieved certain results. As pig production capacity gradually returns to a reasonable level, the pig market situation in the second quarter is expected to be better than the same period last year.

As the Spring Festival gets closer, pork consumption is also beginning to enter peak season. The domestic pig market is also picking up, and piglet prices have risen markedly.

Industry insiders pointed out that the Spring Festival is the biggest and most important festival in China, and the increase in terminal demand for pork and the stocking of downstream slaughterhouses strongly support the rise in pig prices. On the premise that there is no change in supply fundamentals, pig production is expected to decline in 2024, but this does not reverse the fundamentals of supply and demand. Overall pig prices may fluctuate in a narrow range in 2024. However, in the second half of 2024, due to the continued reduction in the number of sows that can be raised in 2023, supply and demand gradually improved or pig prices picked up.

Zheng Xin Futures said that farmers in many parts of the country are currently feeling high, and the price spread of standard fertilizer is increasing. Recently, the national pre-Spring Festival consumer stocking effect was obvious. Combined with the effects of snowfall in central China and east China, it further raised the sentiment of price increases in the market. There is still room for pig prices to rise and rebound. Both supply and demand increased before the holiday season, and the rebound is expected to be highly limited.