Meat Market Trends // After the 2022 Spring Festival, it may well be a period of heightened pressure!

Compared to the rising spot-market prices of live pigs, hog futures prices have shown little improvement, remaining volatile above 16,000 yuan per ton since November. From the end of September, hog futures have rebounded by only about 20%.

In fact, hog supply has seen a significant increase since October. According to data from the Ministry of Agriculture and Rural Affairs, in October 2021, designated enterprises slaughtered 30.23 million hogs—representing an 111% year-on-year rise and marking the highest level since 2009. Meanwhile, from January to October, the total number of hogs slaughtered by these designated enterprises reached 209 million, also hitting the highest point recorded since 2009.

According to a research report by Guoyuan Futures, as of October 17, 16 listed pig companies—including Muyuan, Zhengbang, Wenshi, and New Hope, but excluding Longda Meat Foods—have released their October sales briefs for live pigs. Together, these 16 listed firms sold a total of 11.7124 million live pigs in October, representing a month-on-month increase of 31.63%.

Despite a significant increase in supply, pork prices haven’t plummeted—they’ve instead shown a volatile upward trend. According to data from the Ministry of Agriculture and Rural Affairs, the national average price of live pigs hit a low of 11.53 yuan/kg during the first week of October 2021, but rebounded sharply to 17.1 yuan/kg by the second week of November. As of the third week of November, the wholesale price of pork at agricultural markets nationwide had climbed to 24.18 yuan/kg, marking a nearly 22% cumulative increase over the past five weeks.

"Throughout the year, the period around National Day marks a very distinct turning point. Specifically, the market before National Day typically enters the off-season for consumption, while after the holiday, northern regions gradually transition into winter—and that’s when consumer demand reaches its annual peak." According to Feng Yonghui, an analyst at China Swine Early Warning Network, we’ve now entered the highest peak season for pork consumption across the entire year. The price increases observed from October until now have been driven by rising demand.

In addition to demand factors, the decline in production capacity—driven by the interplay between supply and demand—has also contributed to rising prices. Previously, the pork market endured a deep five-month-long period of losses, during which some newly born piglets or those about to give birth were reportedly culled as part of cost-cutting measures.

"Currently, the market-standard pigs should have been produced around May or June, based on the production cycle. However, due to losses at the time, some piglets were culled earlier than planned." As a result, Feng Yonghui told reporters that, on the supply side, current production capacity has seen a slight decline.

"Actually, the prices during the deep losses in the previous months weren’t reflective of normal market conditions," said Feng Yonghui. "During that period, there was a massive influx of overweight cattle and pigs, along with significant imports flooding the market simultaneously. At the same time, farmers were culling older and larger breeding sows due to mounting losses. As a result, the prices of these pork products remained far below those of healthy, standard-quality pigs, dragging down the overall market price. However, after National Day, the supply of such pigs dwindled sharply, allowing market prices to gradually rebound and return to more normal levels." You could also say that now is a rational return to pricing. ”

According to statistics, among the 31 provinces, municipalities, and autonomous regions, regions experiencing rising prices for three-way crossbred pigs are primarily concentrated in East China, Northwest China, South China, and Northeast China. Notably, pig prices have increased across the board in East China, Northwest China, and South China, with overall price hikes ranging from 0.02 to 0.71 yuan per kilogram—lowest in Shanxi Province and highest in Hainan Province.

As supply increases, demand is also expanding. With the year-end approaching, coupled with growing winter meat-preservation needs in certain regions—and boosted by pre-holiday consumption ahead of New Year’s Day and the Spring Festival—recent pork demand has seen a noticeable uptick. According to Cai Lian She, a pig farmer in Henan shared: "Currently, there’s strong enthusiasm in the market for making cured sausages, and farmers are increasingly favoring larger pigs for sausage production. Meanwhile, many farmers rushed to sell off their heavier pigs during the summer, creating a shortage of big pigs and driving up prices."

Previously, sluggish pork prices prompted some regions to start making sausages earlier than usual. In Sichuan, Tianwei Food reported that its revenue from sausage and cured meat seasonings surged to 63.94 million yuan in the first three quarters—nearly a 33-fold increase year-on-year. Additionally, in October of this year, China launched its second round of central government reserves for frozen pork procurement. Officials emphasized that this round will be longer in duration and larger in scale compared to the first. As a result, pork prices, which had been declining steadily recently, are now showing signs of stabilization and even rebounding.

On the other end, although pork prices have recently shown a volatile upward trend, the industry generally believes that there still isn’t a solid foundation for a significant price increase. Overall, the supply of live pigs remains ample. According to Economic Information Daily, the market is expected to stabilize amid short-term fluctuations.

On November 4, Chen Guanghua, Deputy Director of the Animal Husbandry and Veterinary Bureau under the Ministry of Agriculture and Rural Affairs, pointed out at a press conference that pig production has fully recovered as of the second quarter of this year. Since March, the number of newborn piglets in large-scale farms across the country has consistently remained above 30 million per month—and continues to grow. It is expected that from the fourth quarter of this year through the first quarter of next year, the volume of market-ready fattened pigs will see a significant year-on-year increase, while the current situation of relatively oversupplied pork supplies is likely to persist for some time.

According to the Economic Daily, consumer spending typically declines seasonally after the 2022 Spring Festival, which could lead to another significant drop in pork prices. Based on historical patterns, market lows often fall 20% to 30% below the cost line. If industry costs decline to around 15 yuan per kilogram, the market’s bottom could potentially reach as low as 11 to 12 yuan per kilogram. This aligns with the typical pig cycle and the seasonal nature of live hog prices. After the 2022 Spring Festival, it may well be a period of heightened stress. Pig futures prices may return to normal levels.

The China Aviation Securities research report stated, Currently, hog prices have seen a temporary rebound, but pig inventories remain at high levels, keeping the overall supply-demand situation relatively loose. Huaxi Securities' research report suggests that, considering live pigs The fundamental condition of oversupply remains unchanged. Additionally, pork consumption is expected to weaken somewhat in the first quarter of next year, particularly after the Spring Festival, meaning the trend of reducing sow productivity capacity will likely continue.