猪周期本质为供需波动引发的价格循环After the peak season of the Spring Festival, we ushered in a relatively low season. There was not much loss of production capacity in the first half of the year. The number of pigs released in the second half of the year will decline. At that time, pig prices may experience a relatively considerable rise.
The Zhitong Finance App learned that Xiangcai Securities released a research report stating that it is cautiously optimistic about the 2024 pig market. The pig food ratio has been below the profit and loss point since 2023. In July 2023, the number of pigs that can be raised will gradually decline. It is expected that the number of pigs released will gradually decline around the second half of 2024. Furthermore, after the peak season of the Spring Festival, we ushered in a relatively low season. Production capacity was limited in the first half of the year, and there will be a decline in the number of pigs released in the second half of the year. At that time, pig prices may experience a relatively considerable rise, maintaining the industry's “gain” rating.
The views of Xiangcai Securities are as follows:
The essence of the pig cycle is a price cycle caused by fluctuations in supply and demand
The pig cycle refers to a cyclical phenomenon in pig prices due to fluctuations in pig supply and demand. In a situation where demand for pigs is relatively stable, the core of the pig cycle is fluctuations in pig supply, and the supply side mainly depends on the decisions of farmers.
The cycle trajectory of the “pig cycle” is generally: high meat prices → farmers expand breeding (large increase in sow stocks) → increase in pig supply (supply exceeds demand) → meat prices fall → farmers begin to massively eliminate sows → supply of pigs decreases (supply is in short supply) → meat prices rise. Over and over again, this has formed what is known as the “pig cycle.”
This pig cycle has been going on for a long time and is still in the grinding stage
Since 2006, we have experienced three complete pig cycles. The duration of each pig cycle is about 4 years. Currently, the fourth round of the cycle is still bottoming out. Judging from the various pig cycles, outbreaks of varying degrees occurred in the bottom regions of the 2006, 2010, and 2018 cycles, which accelerated the reduction of production capacity. Furthermore, the 2014 pig cycle was mainly affected by environmental protection policies, and supply-side reforms promoted the elimination of production capacity.
Each cycle has unique causes and effects, but changes in supply and demand and price fluctuations are common characteristics.
The pig market has been in a state of loss in breeding in 2023. The main cause is that overall pig production capacity continues to be high. After the number of breeding sows peaked in 2021, the loss of production capacity has been relatively slow. On the one hand, as industrial concentration increases, the ability of large-scale enterprises to withstand losses and risks is gradually increasing; but on the other hand, large-scale pig farms are less arbitrary and flexible in regulating production capacity than free-range farmers.
In 2022, the market experienced a long period of price rebound and high profit, which forced the removal of production capacity to be interrupted, and the breeding of sows remained at a high level. After 2023, the pig food ratio has been below the profit and loss point, and production capacity has begun to decline. In July 2023, the number of pigs that can be raised will gradually decline around the second half of 2024. Based on the cycle of changes in the number of sows that can be raised to changes in the supply of commercial pigs, it usually takes about 10 months.
Risk warning: macroeconomic recovery falls short of expectations; pig consumption falls short of expectations; production capacity is falling short of expectations.
