Price Weekly Report | Pork Prices Continue Approaching 10 Yuan/Kilogram Mark, Slow Capacity Digestion May Prolong Bottom-Building Period

According to the Ministry of Agriculture and Rural Affairs’ monitoring, on March 20th, the average wholesale price of pork at national agricultural product markets was 15.98 yuan/kg, down 1.2% from last Friday (March 13th), when it was 16.17 yuan/kg. The average price this week was 16.13 yuan/kg, a 3.4% decrease compared to last week’s average of 16.7 yuan/kg.

This week, domestic live pig prices showed an overall trend of rising first and then falling, with weekly average prices decreasing week-on-week. According to data from China Swine Industry Network, on March 20th, the price of external three-line pigs was 10.24 yuan/kg, down 0.5% from last Friday (March 13th), when it was 10.29 yuan/kg. Looking at the weekly average, the price of live pigs was 10.28 yuan/kg, a 0.4% decrease from last week’s average of 10.32 yuan/kg.

Recent pork and live pig prices. Chart by The Paper News

This week, nationwide live pig trading weights have stopped rising and started to decline. Zhuo Chuang Information’s monitoring shows the average trading weight of live pigs nationwide is 125.55 kg, a decrease of 0.04% week-on-week. Trading weights vary by province this week, with some regions seeing increases and others decreases. Some farmers lack confidence in the market outlook and are actively reducing slaughter weights to minimize losses, leading to a decrease in pig weights. In some areas, weak demand has limited farmers’ willingness to sell, causing them to hold onto pigs and increase weights, which has driven up the average weight. Overall, most regions experienced a decline in weight, causing the national average trading weight to stop rising and decrease this week. Key slaughter enterprises in China saw their operating rates increase week-on-week, with an average of 34.32% during the week, up 2.34 percentage points from last week. Currently, slaughterhouses are still gradually recovering slaughter volumes, with slaughter rates and operating rates continuing to rise slightly. Additionally, due to lower pig prices, slaughterhouses’ procurement costs have decreased, encouraging some regions to stockpile pigs, which has contributed to a slight increase in operating rates this week.

Recently, the National Development and Reform Commission and the Ministry of Agriculture and Rural Affairs organized a meeting with live pig breeding companies to analyze market trends and plan market regulation measures. The meeting pointed out that, influenced by factors such as post-holiday declining demand, pig prices have fallen into an early warning zone of excessive decline. The central government has begun stockpiling frozen pork reserves and guiding local authorities to increase their stockpiling efforts to form a coordinated regulatory force. The meeting emphasized that pig breeding enterprises should strictly implement capacity regulation measures, plan production and operations scientifically, orderly reduce the breeding sow herd, and reasonably control slaughter volumes to better align supply and demand. Moving forward, the National Development and Reform Commission and the Ministry of Agriculture and Rural Affairs will closely monitor the supply, demand, and price trends in the pig market, promptly carry out reserve adjustments, and continue to strengthen comprehensive capacity regulation to promote stable market operation.

Guoxin Futures believes that recent slaughter volumes have increased rapidly, but sales of fresh products have seen limited improvement, with frozen inventory continuously rising, reflecting some stockpiling behavior at slaughterhouses. Meanwhile, sporadic restocking of second-generation pigs has occurred, and utilization of pig pens has increased, but slaughter weights remain high, indicating slow liquidation of live inventory. Given the current low absolute prices and the lack of economic justification for holding pigs, industry-led stockpiling is unsustainable. In the future, there is a risk of industry-wide sell-offs under increased funding pressure. In the long term, piglet prices during peak seasons remain weak, fattening profits continue to be losses, further discouraging restocking, and piglet profits are expected to fall back into losses, possibly accelerating capacity reduction.

Dadi Futures believes that slow digestion of near-term capacity may prolong the bottoming process of pig prices. During this period, there may be temporary rebounds, but cyclical reversals will likely require patience until the breeding sector gradually reduces profits and accelerates capacity reduction.

Zhuo Chuang Information forecasts that the national market may experience slight fluctuations or a mild decline in the coming week. Regarding supply, pig sources from breeding units remain ample and are likely to continue entering the market, exerting downward pressure on prices. However, after prices fall to lower levels, farmers may resist further declines during midweek, which could limit further drops. On the demand side, slaughter volume growth from downstream slaughterhouses may be limited, and cautious restocking of second-generation pigs may also weigh on market sentiment.

(Source: The Paper News)