Since mid-January this year, the price of live pigs has fallen sharply and has fallen to 15 in recent days. -16 yuan per kilogram.

If you look at live hog spot and futures together, you can find that this round of decline is divided into two stages:mid-January to early May is phase one, and mid-May to now is phase two.

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Live pig (external three yuan) spot price trend

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Live pig futures 2109 futures price trend

Phase 1:

The price of pork fell from mid-January to early May, and the spot priceThe drop is large, but in September The futures contract declined slightly. At this stage, the market expects that pork prices will fall in the short term, and pork prices will rebound when the peak demand season comes in the second half of the year. Therefore, the spot price fell by about 15 yuan per kilogram, while the futures price rose during the period.

​Phase 2:

The rapid decline from mid-May to now, the hog futures opened with a falling limit The rapid decline channel, the decline of futures contracts began to be much larger than that of the spot. At this stage, the market’s expectations have become extremely pessimistic, and they no longer look forward to the so-called autumn market.

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respectively review the two different decline logics in order to see the future trend clearly.

To analyze the pig market, we should start from the second half of 2018. Before 2018, after more than three years of turbulence and decline, the price of live pigs fell to about 11 yuan. At the same time, the environmental protection policy was implemented that year, and retail investors were banned from raising pigs. However, the outbreak of African Swine Fever completely disrupted the rhythm and made the supply worse.

Cycleclearance, environmental protection prohibition, African swine fever, three things happen At the same time, the price of pigs skyrocketed under the imbalance between supply and demand, rising from about 11 yuan to more than 40 yuan in a short time, The pig-to-food ratio (the price of pigs and corn) reached 18:1. After 2019 and 2020, it fluctuated between 29-39 yuan. After two years of repeated shocks, pig farmers have become accustomed to betting on prices. The pig price is low and waiting for a period of time, there is a high probability that it will rebound.

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The decline that began in mid-January this year has a long duration and a large decline. In this round of decline, pig farmers are still accustomed to the low price and not selling and so on to rebound. After all, the previous two years proved that doing so can sell better prices. There are exceptions to everything. This time the decline was too long, and the pressure on the pen led to a surge in the number of big pigs, even more than 400 kilograms. The pigs weighing heavily, the demand continues to be sluggish, and the weather is starting to get hot. This part of the pig farmers at the price of the pens began to panic selling, which led to the phenomenon of strong supply and further depressed prices, and the pig-to-food ratio also fell to already The loss is about 5.5:1.

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So, analyze the two-stage decline in pig prices this year

The reason for the decline in stage one is the recovery of supply and the sluggish demand. Not only have large farms expanded their production rapidly, but also retail households have been expanding their production in the past two years. There are two reasons for the sluggish demand. It is the off-season, and secondly, the overall consumption is relatively sluggish now.

Phase two falling The reason is more caused by farmers selling big pigs in hot weather. The difference is that this time the spot market and the futures fell together, and the market expectation turned very pessimistic.

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But from a rational point of view, the short-term panic and sell-off of big pigs are often short-term behaviors. Especially when the price drops to a general loss in the industry, the kinetic energy to continue the rapid decline will weaken. However, it is almost impossible for the price to return to the previous high profit range, because the supply has basically recovered Normal state, but consumption is far from improving.

We believe that the pig price drop this time will continue the process of de-retailing pig farming before 2018. Without the interruption of African swine fever, the de-retailization of pig farming should have been basically completed. In the process of this round of pork price increases, retail investors and large breeding companies are actively expanding production. After the price of pigs has fallen, retail investors are likely to be unable to compete with large breeding companies because of their small capital and scale, and poor risk resistance. drop out.

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The overall view of the market has changed from being optimistic about the market in the third quarter. It is generally believed that the third quarter may be just a small rebound in the shock and fall, even if There are also relatively limited increases. Live pig futures The main contract has been The delivery is very near, and it will be a good ending for spot traders to maintain the current price by then.

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The pig-to-food ratio is now 5.5:1. It seems that the pig-to-food ratio is a more reliable way of thinking about trading. .

but Live Pig Futures 09 contract and Corn futuresratio of the span>09 contract is still around 7.3-7.5. It has not reached a good trading range. You can continue to wait for a while. If the futures can wait until the ratio is around 6.5, you can use futures to increase the monthly pig-to-food ratio.

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