March pig prices continue to hit new lows! Severe supply and demand imbalance, with continued weak bottoming in late month

（Source: Today’s Hog Price Trends Price List）

In mid-to-early March, the domestic hog market in China saw downward pressure, with prices’ center of gravity continuing to shift lower. As for the reasons, it mainly stems from the prior period’s large pig backlogs being concentrated for slaughter, which led to a clearly increased supply increment, while the off-season characteristics of terminal consumption became more pronounced and the diversion effect from substitutes intensified, resulting in a severe imbalance between supply and demand. Looking ahead to the latter part of the month, there is no positive support on either end of supply and demand. Combined with weak sentiment regarding second-round fattening and replenishment, hog prices may continue to grind down in a weak bottoming-out trend, with insufficient momentum for a short-term rebound.

National hog prices in the first half of March fluctuate and fall

Data from Zhuochuang Information shows that nationwide hog prices in March have been trending downward. As of March 23, Zhuochuang Information’s monitored national average transaction price for lean-type hogs was 9.71 yuan per kilogram, down 0.82 yuan per kilogram from 10.53 yuan per kilogram at the beginning of the month, representing a month-over-month decline of 7.84%.

March supply-demand imbalance: hog prices lack upward momentum

Hog prices in March fluctuate and fall, primarily due to a severe supply-demand imbalance. On the supply side, the slaughter output plan for the breeding sector in February was not ideal, with only 93.95% completed. Some backlog pigs that had not been slaughtered earlier were delayed to be slaughtered in March; large-weight hog sources were concentrated in fulfillment, leading to a clear increase in supply. On the demand side, after the Spring Festival, the market entered the traditional off-season. Household inventories had not yet been worked through, catering consumption recovered slowly, and sales of terminal “white tickets” were not smooth. In addition, with the growing popularization of healthy eating concepts, substitute products such as poultry meat have had a more obvious diversion effect, and pork consumption has remained weak. Moreover, rising feed costs have worsened breeding losses; some operators’ willingness to replenish for second-round fattening has fallen noticeably compared with the same period last year. Due to policy restrictions and losses, second-round fattening has lost its support for prices. During the month, supply-demand remained imbalanced, and hog prices fell to historical lows.

In the second half of March, hog prices may continue the bottom-grinding trend

From the supply side, according to Zhuochuang Information’s monitoring of 227 sampled breeding companies’ March hog slaughter plans for their own operations, the plan increased by 22.54% month over month, a relatively notable rise. Also, according to Zhuochuang Information’s survey, companies’ overall completion progress during the month was generally on the slow side, and there is still some resistance to slaughter output in the second half. In addition, some operators lack confidence in the outlook; in order to reduce losses, their intention to slaughter with reduced weight has become明显. The supply side continues to have a suppressing effect on hog prices.

From the demand side, as temperatures gradually rise, terminal “white ticket” sales are unlikely to improve significantly, and downstream slaughter volumes are expected to show no obvious increase. The demand side’s support for hog prices is weak.

From the perspective of second-round fattening, with feed prices moving upward, the cost of raising weight increases for breeding operations. Coupled with some operators’ lack of confidence in the market outlook, even if current hog prices are at a low level, the heat for second-round fattening may still be hard to pick up, and it will be difficult to provide a floor for hog prices.

In summary, in the first half and mid-to-early March period, supply exceeded demand and hog prices fell. In the short term, in the latter half of March, pressure from slaughtering larger-weight hogs is still present; demand on the slaughtering side is unlikely to recover noticeably; and there is insufficient support from second-round fattening. Therefore, hog prices are likely to continue the low-level bottom-grinding trend. Going forward, it is necessary to continuously track the slaughter schedule, terminal sales, and changes in feed costs, and to be alert to short-term volatility risks caused by concentrated price-cut slaughter.

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