“From the survey, the cost of live pigs for breeding companies above designated size in Shandong, Henan and other northern China regions is 17 yuan per kilogram at a high point, and 15 yuan at a low point.” Liu Sikui, senior researcher of agricultural products at Zhongyuan Futures, introduced Weighed.

This statement is true. According to the 21st Century Business Herald reporter, before this round of pig price increases in 2019, the cost of pig breeding fluctuated around 15 yuan/kg, and the “full cost” given by Muyuan shares in the first quarter of this year was also around 16 yuan/kg.

According to data from the National Bureau of Statistics on June 15th, in early June 2021, compared with late May, live pigs (external three yuan) per kilogram has dropped to 15.8 yuan, a month-on-month decrease of 11.2%.

This means that after the live pig spot has fallen below the cost line of purchased piglet fattening, it has once again fallen below the cost line of self-breeding and self-raising enterprises with more cost advantages, and the industry’s losses have been further expanded.

In this regard, Liu Sikui pointed out that since 2007, domestic live pig prices have always fluctuated in the range of 10 yuan to 20 yuan per kilogram, and the price of 15 yuan is already at a relatively low level.”Although a small number of Enterprises with outstanding cost control are still profitable, but the industry has already experienced serious losses.”

Under the background of the”big pig”listing has not ended, and the pork inventory has not been effectively digested, The price of live pigs is still hard to say bottom out in the short term.

Muyuan’s first quarter cost line broke

In June 2019, the pig breeding industry began to turn from a loss to a profit. In June 2021, it is also in an important position. Turning point.

The Japanese newspaper reported on May 24 that the price of live pigs (three yuan outside) given by the Statistics Bureau in mid-May approached Muyuan’s cost line of about 16 yuan/kg in the first quarter.

In just 20 days, the above-mentioned cost line has been broken, and the price of live pigs in early June disclosed on June 15 has fallen to 15.8 yuan/kg.

It should be noted that the ten-year data tracked by the Bureau of Statistics is very referential and basically consistent with the sales data of related listed companies, including Muyuan shares, Wen’s shares, Zhengbang Technology, New Hope and Tianbang shares, including the top listed pig companies, sold prices in May at about 18 yuan/kg.

Among large-scale breeding companies, New Hope and other companies previously purchased a large number of piglets, and the comprehensive breeding cost was higher than that of the”self-reproduction and self-raising” Muyuan shares. The cost advantage of the latter is very prominent. For this reason It also caused inquiries from the exchange.

However, in the cycle of falling pig prices, companies such as New Hope and Zhengbang Technology can reduce overall cost pressure by stopping outsourcing piglets. For example, New Hope has begun to emphasize”valuable slaughter”. , Stop outsourcing piglets.

In contrast, although the cost of Muyuan’s”fully self-supporting” model is lower than that of peer companies, once the price of pigs breaks the cost line, the cost adjustment space is less than that of outsourced piglet fattening companies.

For this reason, Muyuan has also regarded”good cost management” as the core work of this year. The specific methods include reducing costs through the improvement of production indicators, labor efficiency and management level, and established the 2021 Cost target below 14 yuan/kg.

Although the company has not announced the cost reduction in the second quarter recently, based on the above-mentioned cost in the first quarter and the survey of Centaline Futures, the company is currently on the verge of loss.

This in itself can also be used as a signal, that is, Muyuan shares, which have the most prominent cost advantage, are beginning to lose money, and other listed pig breeding companies are hardly optimistic in their operations.

What’s more dangerous is that in the short term, there is still no turning point for pig prices to bottom out.

After the Spring Festival, affected by the epidemic, there have been large-scale slaughter pigs The phenomenon of concentrated slaughter has led to a rapid increase in market supply.” Liu Sikui said.

Some public data can provide supporting evidence. Taking Zhengbang Technology as an example, since March this year, the average weight of the company’s slaughter pigs has continued to increase, from 126.15 kg to 131.27 kg, and then to 140.52 kg in May.

According to Liu Sikui’s prediction, the”big pig” on the market may not end until the end of June.

The concentration of”big pigs” for slaughter and slaughter has resulted in a significant increase in the overall inventory of pork. Superimposed on the fact that the current consumption is in the off-season, terminal demand is sluggish, and inventory is difficult to effectively digest, or the price of live pigs will be affected again in the short term. The rebound brings pressure.

The loss cycle has just started

There is still some hope for the future price, maybe only Futures market.

On June 15, the live pig futures collectively fell, representing The settlement price of the 2109 contract for the live pig price in September this year is still as high as 19035 yuan/ton, which is 3.24 yuan/kg higher than the live pig spot in mid-June.

The reason is that the epidemic situation around the North China Spring Festival once caused the market to reduce the enthusiasm for replenishment of pigs. Based on the piglet fattening cycle, the market expects that there may be a certain gap on the supply side in September this year.

However, as the delivery date of the 2109 contract continues to approach, the above expectations are constantly weakening.

“Assuming that the live pig spot did not rebound significantly before September, future prices Under the effect of the delivery mechanism, it will also return to the spot price.” Liu Sikui said.

Actually, starting from May this year, the price of live pig futures has begun to return, which is higher than the spot premium The range has dropped from 5 yuan/kg to the current 3 yuan/kg.

As far as the historical trend of domestic pigs is concerned, the industry’s losses will continue for a long time, rather than rebound immediately after falling below the break-even line.

According to the statistics of the average price of live pigs in 22 provinces and cities, it can be seen that from May 2007 to July 2019, the price of live pigs operated in the range of 10 yuan to 20 yuan/kg most of the time. Among them, 15 yuan-16 yuan/kg is the industry average breeding cost line.

Take a step back and take Muyuan’s hope to reach the cost target of 14 yuan/kg as the break-even line.

Since 2007, the pig breeding industry has experienced three periods of continuous losses in the industry:September 2008 to November 2010, March 2013 to May 2015, and May 2017. As of March 2019, the average price of live pigs in the 22 provinces and cities mentioned above will be below 14 yuan/kg.

The above-mentioned loss lasts for about 2 years, which itself has been affected by the evolution of the relationship between supply and demand.

The continuous expansion of the scope of losses at the breeding end will promote the shrinkage of production capacity , When the production capacity is reduced to a certain extent and effective cleared out, the market supply and demand relationship will re-enter Balanced, the price of pigs started a new round of rise.

From the above point of view, the pig breeding industry obviously has not entered the link of spontaneous reduction in production capacity, and it has just entered a loss cycle at this stage.

Of course, there are many variables in it, which may bring changes to the above-mentioned running rhythm.

For example, in 2019 and 2020, the leading companies in the breeding industry that are aggressively increasing their pig production capacity, after the current operating pressure has increased significantly, can the planned production capacity still be implemented as scheduled? After this round of pig prices soared and plummeted, the National Development and Reform Commission and other departments jointly issued the”Improving the Government’s Pork Reserve Regulation Mechanism and Doing a Good Job in the Pork Market to Ensure Supply and Stabilize Prices”, and the market is also highly anticipated.

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