In the fourth quarter of 2022, the peak demand season, pig prices showed an unseasonal decline, and fell below the self-breeding and self-raising cost line. The breeding side has continued to suffer losses for more than a month. Affected by many factors such as funds, epidemics, and expectations, the number of reproductive sows has stopped rising and declined. Among them, the number of small and medium-sized farms has dropped more than that of large-scale farms. The number of sows slaughtered in the downstream slaughtering process has also continued to increase, and the elimination of production capacity has "quietly occurred."

1. The price of live pigs has fallen to a low level, and the profit of breeding has turned from positive to negative

According to the comparison of pig price and profit data from Zhuochuang Information from 2022 to 2023, it was found that in 2022, pig breeding will only It was in the profit stage from July to November, but in the fourth quarter, during the peak demand season, pig prices showed an anti-seasonal oversold phenomenon and fell below the breeding cost line. After the Spring Festival, demand in the traditional consumption off-season has weakened significantly, and it is difficult for pig prices to rise at low levels. Zhuochuang Information data monitoring shows that the average price of live pigs in January 2023 was 14.68 yuan/kg, a month-on-month decrease of 22.32%, of which the lowest price in the month was only 13.78 yuan/kg, which was significantly lower than the self-breeding and self-raising cost line. The profit value of self-breeding and self-raising turned from positive to negative in January, with the average profit being -113.39 yuan/head, and the lowest value being -236.78 yuan/head at the end of January. Breeding profits continue to be negative, breeding confidence is low and funds are limited, and some areas have begun to reduce production capacity. (Note: The profit value is a theoretical calculation value)

Comparison of pig prices and self-breeding and self-raising profits

2. The number of reproductive sows shows signs of shrinking, with small and medium-sized farms showing a significant decline

Zhuochuang Information sample monitoring data shows that as of January 2023, the number of breeding sows nationwide reached a stage high and then began to shrink, with a slight month-on-month decrease of 0.30. Among them, large-scale venues decreased by 0.03 month-on-month, and small and medium-sized venues decreased by 4.93 points. On the one hand, due to the large base of breeding sows in large-scale breeding farms, a one-month loss period is not enough to change the strategic planning of large-scale farms, while small and medium-sized farms are more flexible; on the other hand, breeding continues to suffer losses, and small and medium-sized farms are due to lack of funds. Due to restrictions, some farms were forced to eliminate fertile sows, resulting in a greater reduction in the number of fertile sows; in addition, January to February was the peak period for the recurrence of African fever in the north, and large-scale farm biological prevention and control measures were It is relatively standardized, with a small proportion of sick pigs. However, due to a small base and insufficient prevention and control measures, small and medium-sized farms have a larger proportion of sick pigs, and the decline in the stock is more obvious.

The number of breeding sows and the month-on-month trend chart

3. The price of culled sows has followed the decline in pig prices, and the slaughter volume continues to increase

The upstream breeding link can The reduction in the number of breeding sows and the increase in the number of culls can also be verified through the slaughtering process. According to Zhuochuang Information data monitoring, the price of culled sows has continued to decline along with the price of live pigs since December 2022. As of January 2023, the average selling price of culled sows is 10.42 yuan/kg, a month-on-month decrease of 21.50. Some slaughtering companies choose to slaughter Sows replace large fat pigs, thereby reducing raw material costs and increasing slaughter profits. In addition, farmers have eliminated some sows, the quantity of sows has increased and their prices have decreased, and the acquisitions of slaughterhouses have been smooth, further increasing the number of sows slaughtered. Zhuochuang Information predicts that the slaughter volume of sows in January 2023 will reach 44,000, an increase of 7.32 from the previous month.

Chart of price and slaughter volume of enterprise culled sows

The low pig prices from April to February are a phased phenomenon

Pork prices continue to be low, and breeding losses , some small and medium-sized households eliminated production capacity. However, the bottoming out of pig prices is not a cyclical downturn, but a deep drop in pig prices caused by a periodic oversupply. It does not have long-term trend characteristics. Therefore, medium and large-scale farms will not change their strategic planning or production capacity. Elimination will not have large-scale effects. At the same time, the increase in the number of secondary fattening households in the market has caused a short-term supply shortage in the market, and the tightening of the supply side may support a rebound in pig prices. In addition, the price of pigs has bottomed out, and slaughtering companies' move to stock up on bargains has led to an increase in slaughter volume, further driving up the price of pigs from the demand side. Therefore, at this stage, pig prices fluctuated at low levels, with most prices above 14.0 yuan/kg, but did not continue to drop.

To sum up, since the fourth quarter of last year, the price of live pigs has fallen deeply and is at a periodic low, resulting in continued losses in breeding. Farms have begun to eliminate production capacity. Among them, the number of reproductive sows in small and medium-sized farms has dropped more than that in large-scale farms. . However, it should be noted that the emergence of favorable factors such as secondary fattening and the storage of frozen products may shorten the duration of low pig prices. It is expected that pig prices may bottom out in March.