The hog market ended with the sharp decline in production capacity and price spikes in the first half of 2019. For the second half of the year, everyone is concerned about three issues: how many pigs are left, how much meat is still missing, and how much the price can rise. We expect the pig stock to be at the end of the year. The year-on-year decline is likely to reach 50%, pork production in the whole year is down by 20%, and prices are expected to hit a record high.
The process of pig production to go is still on the road
In the first half of 2019, the Chinese pig industry experienced the most intensive process of de-capacity in history. According to the official data released by the Ministry of Agriculture and Rural Affairs, by the end of June 2019, the number of live pigs in China fell by 25.8% year-on-year, and the number of able-bred stocks fell by 26.7%. The magnitude of the decline is rare in history. According to this calculation, the number of live pigs at the end of June was about 249 million, and the number of able sows was about 25.4 million, the lowest since 1997. On the other hand, the investigation results of the field investigation of pigs in the institutions are even more pessimistic. It is generally believed that the decline of the main producing provinces by the end of June is generally more than 30%, including Guangdong, Guangxi, Hubei, Henan, Shandong, Liaoning, etc. The range is above 50%. We believe that the production capacity of live pigs will continue in the second half of the year, and the stock level will continue to decline. The reasons are:
(1) The effects of non-plague are still continuing to ferment. At present, Sichuan and the two lakes are in a multi-stage, and the pre-epidemic area that has ended the blockade is likely to recur again in the second half of the year. As far as the current level of epidemic prevention is concerned, it is difficult to control, and it lacks a good bio-safe environment and does not have a cut-off. An effective means of its dissemination. The most realistic coping strategy can only be to adjust the natural capacity through de-capacity, and realize the controllable epidemic situation at the highest cost: that is, after the production capacity drops to a certain level, the breeding density is greatly reduced, and the remaining management regulations, biosafety The better companies and other farmers have been eliminated. Even if there are no vaccine products, the epidemic can be expected to reach a basically controllable level.
(2) Insufficient replenishment and reinstatement. Due to the uncontrollable epidemic situation, restrictions on transportation restrictions, and limited government support, the practitioners’ replenishment and reinstatement will be relatively low. The agricultural department has previously conducted a questionnaire survey on 1,500 pig farms. The survey results show that the risk of the epidemic is high. The farmers who explicitly choose not to fill the column account for 55%, and those who hesitate to watch are 22%, and only 18% intend to fill the column. Although the enthusiasm for replenishing and rehabilitating will gradually increase under the stimulation of rising profits, it takes a long time to create and recover a biosafety environment, and it is large-scale and safe for areas affected by the epidemic. Rehabilitation activities will not be fully implemented until 2020.
(3) Retaining sows can not be saved. At present, the phenomenon of replanting in pig farms has gradually increased. According to the survey, the number of endowed pigs in the northeastern part of the farm accounted for about half of the stocks of fertile sows. The sales volume of the scale farms was significantly higher than that of the sows. We expect to keep the seeds in the second half of the year. It will be fully promoted and normalized nationwide, with a spatial order from northeast to north China to the south. It is estimated that by the end of 2019, more than 50% of the farms will be kept, and the stock of sows will be retained. The proportion of the total number of breeding sows will exceed 20%. Retention will significantly slow down the rate of growth of sows, which will help restore the supply of finishing pigs in 2020. However, in the second half of 2019, the fattening pigs will be more short-selling, and the ternary sows have poor breeding ability. Pull down the overall production level of the sow herd. Taken together, we expect that the live pig stocks will continue to decline in the second half of the year. The officially announced sows and able sows may fall by 35-40% year-on-year, the actual decline will exceed 50%, and the proportion of ternary sows will be retained. Over 20%, resulting in a decline in the overall level of breeding indicators, thus making the already scarce supply of pork worse.
Unfilled pork supply gap
According to the data released by the National Bureau of Statistics, the output of pig, beef, sheep and poultry in the first half of 2019 was 39.11 million tons, down 2.1%. The output of beef, mutton and poultry increased by 2.4%, 1.5% and 5.6% respectively, and pork production decreased by 5.5. %, according to the pork production of 26.14 million tons in the first half of 2018, the pork production in the first half of 2019 is about 24.7 million tons, which is the lowest record in the history since 2011. However, we believe that the pork output in the first half of the year decreased by only 5.5%. % is undervalued, and the actual decline should be around 10%. From the data analysis of the fixed-point slaughter volume, the fixed slaughter volume in the first five months was 93.39 million heads, down 8.5% year-on-year, while the fixed-point slaughter volume in June will continue to decline from April to May, and the estimated slaughter volume in the first half of the year is about 1.1. Billion head, down about 9% year-on-year. Our fake set point slaughter can reflect the overall slaughter volume and the trend of the slaughter. Considering the fact that large-scale clearing has led to a general decline in pig slaughter weight, it is a relatively reasonable estimate that the pork production in the first half of the year will fall by about 10%.
According to the breeding cycle of pigs, the number of live pigs in the second half of the year depends largely on the size of the sows that can be used in the period from September 2018 to February 2019. This stage is exactly the period when the non-embarrassing outbreak spreads to the whole country. The pig stocks fell by about 10% year-on-year, but due to the impact of non-sputum, the pig mortality rate increased by at least 10 percentage points compared with the normal year, coupled with the decline in sow production indicators and the impact of fattening sows (estimated impact 2 -3 percentage points), it is expected that the number of finishing pigs will drop by more than 25% in the second half of the year, and the annual decline will be about 18-20%. The annual decline in pork production is estimated to be around 20%, which is about 10 million tons.
Consumption substitution and imports can make up for a portion of the pork supply gap. According to the China Feed Industry Association, the sales of broiler and meat ducks increased by 10.1% and 14.6% respectively in the first five months of this year to estimate the amount of meat and poultry and the corresponding poultry output. The year-on-year increase is at most about 10%, that is, the level of 1.5-2 million tons, most of which will occur in the second half. On the import side, due to the ban on Canadian meat products and the increase in import demand in Southeast Asian countries, the import growth rate cannot be overestimated. Even if the monthly import of pork is 200,000 tons, pork is 150,000. Tons of super optimistic expectations, China’s annual pork product imports are also difficult to exceed 3.5 million tons, an increase of 2 million tons, plus beef and mutton production and imports, can also provide up to 1 million tons of increments, These sums add up to about 4.5-5 million tons, which means that even in the best case, the pork supply gap can only be half done, and the remaining five or six million tons is still the largest in history. It is self-evident that the meat supply gap will bring about the trend of the pig price in the second half of the year.
Live pig prices and profits hit record highs
In the first half of 2019, driven by the gap between supply and demand in various regions, the price of pigs began to rise. The average price of the three yuan rose from 6 yuan/kg at the beginning of the year to more than 8 yuan/kg in the middle of the year, an increase of about 40%. The price is about 7 yuan / kg, up about 18% year-on-year. This is the price increase that occurred in the same period of the year when the live pig stocks fell by 20%, and the slaughter and pork supply decreased by 9-10%, while the second half of the year was saved and slaughtered. The year-on-year decline will be doubled again. We expect the average price to reach 10 yuan/kg in the second half of the year, up 50% year-on-year. The high point in the year is expected to exceed 13 yuan/kg, and the price hit a record high.
Post time: Aug-06-2019