Pig prices have fallen, feed has risen

In September 2020, Tao Yishan, Chairman of Tang Renshen (002567.SZ), said in an interview with China Economic Weekly: “It has long been predicted that by 2022, domestic meat prices will fall to 10 yuan. I am even more pessimistic. By then, it is entirely possible for the price of meat to fall to 4-5 yuan.”

Pig prices have fallen, feed has risen

This became the “five-element theory of pig price” that caused a public outcry at the time. You know, at that time, the domestic pork price was running at a high level in the range of 50-60 yuan/kg.

When the time came to June 2021, Tao Yishan’s words became true. In early June this year, the wholesale price of some domestic pork fell below 10 yuan per catty, and the plummeting pork price does not seem to be far away from 5 yuan per catty.

While the price of pork has fallen, the price of feed has risen. In early June, a number of mainstream feed companies issued notices of price increases. Among them, the new round of pig feed price increases was mostly RMB 75/ton.

Under the double impact of falling pork prices and rising feed prices, pig farming companies have had a hard time. Take Muyuan Co., Ltd. (002714.SZ), known as “Pig in Maotai” as an example. The company’s operating income in the first quarter of this year was 20.152 billion yuan, an increase of nearly 1.5 times year-on-year, but its net profit dropped by nearly 70%; Since the callback has been close to 40%, today’s closing price is 56.18 yuan per share, the latest market value of 295.6 billion yuan.

Muyuan shares stock price
Pork prices fell for 20 consecutive weeks

The slaughter price of live pigs fell off the cliff

As the recovery of live pig production accelerates and market supply continues to increase, pork prices across the country have entered a downward channel, which has fallen for 20 consecutive weeks. According to the latest data from the Ministry of Agriculture and Rural Affairs, in the third week of June, the national live pig price was 15.13 yuan per kilogram, a decrease of 6.8% from last week and a year-on-year decrease of 50.9%.

According to data from the industry website China Pig.com, the price of live pigs has also reached a new low again. On June 23, live pigs (external three yuan) were reported at 12.67 yuan/kg; live pigs (internal three yuan) were reported at 12.28 yuan/kg; and live pigs (early mixed pigs) were reported at 11.85 yuan/kg.

Pork price chart
According to statistics from the Livestock and Poultry Breeding Association of Meizhou City, Guangdong Province, the price of live pigs has continued to fall from 17 yuan to 18 yuan per catty in December 2020 to about 8 yuan per catty today. There has been a “cliff-breaking” decline, a drop of nearly half. . Affected by the general rise in commodities in recent times, the price of pig feed has increased significantly compared with before. Now the cost price of live pigs for slaughter has also risen from the previous 6 yuan/jin to 9 yuan/jin. In other words, the price of slaughter pigs has fallen below the break-even point.

To this end, the China Animal Husbandry Association issued a proposal to pig breeding companies on June 20.

The proposal warned everyone that although pork prices have been confirmed to enter a downward channel, and the loss rate of pig breeding in May reached 9.7%, all companies should pay more attention to the official pig production and market data, and follow the normal production plan in an orderly manner. . As long as the cost is controlled and the market is not good, you can make money. Don’t panic at this time, let alone listen to rumors and arrange production with a gambling mentality.

Association Proposal
The continued decline in pork prices has also attracted the attention of the agricultural sector.

On June 16, the National Development and Reform Commission released data stating that during the week of June 7-11, the national average pig food ratio was 5.88:1, which fell below the officially set price stability range-below 6. :1 is the “three-level early warning of excessive decline”, prompting farms (households) to scientifically arrange production and operation decisions to maintain pig production capacity at a reasonable level.

The price ratio of pigs and food is based on the ratio of the weekly price of live pigs monitored by the National Development and Reform Commission to the average wholesale price of second-class corn in major wholesale markets across the country. Based on the production cost data in recent years, the price of pigs corresponding to the break-even point of pig production is about 7 :1.

Raw material prices rise

Feed ushered in a wave of price increases

It is worth noting that while the price of pork has fallen, the price of feed has risen.

In early June, a number of mainstream material companies issued price increases notices. The feed industry information network shows that in this round of price increases, chicken feed and pig feed are mostly 75 yuan/ton, and duck and goose feed are mostly 50 yuan/ton.

Some pig feed prices rise
However, in the face of increasingly sluggish pig prices, some feed companies have chosen to cut prices. Starting from June 6, the prices of the Twins Group’s education and protection feeds and concentrated feeds have been reduced by RMB 75/ton, and the prices of other pig feeds have been reduced by RMB 50/ton.

Data monitored by the Ministry of Agriculture and Rural Affairs showed that in the third week of June, the average price of compound feed for fattening pigs was 3.63 yuan/kg, an increase of 0.3% from the previous week and a year-on-year increase of 15.2%.

According to a report from “Times Finance”, Aunt Chen, a farmer in Yingde, Guangdong, introduced that different feeds are used in different stages of pig growth. Among them, the feed for piglets is the most expensive. It used to be 260 yuan per 80 catties, but now it is 290 yuan. Every 80 catties. Old Xu, who has been raising pigs in Qingyuan, Guangdong for more than 20 years, said that he has never seen such a drastic increase in feed prices. “The price increase in feed started at the end of last year and the beginning of this year. Previously, a bag of feed (80 kg) was around 110 yuan. Now it costs 140-150 yuan a bag, which is one-third more expensive.”

A reporter from the Red Star Capital Bureau noted that the wholesale price of pig feed on the market currently varies.

For example, a “20% pig concentrated feed dehulled soybean meal pig concentrated feed” on a wholesale website has a wholesale price of 4700 yuan per ton and a specification of 40 kg per bag. For a simple calculation, the price per bag is 188 yuan.

Pig feed price
The other is also a 40kg pig feed, with a price tag of 135 yuan per bag.

Pig feed price
The industry believes that the sharp increase in raw materials is the main reason for the price increase of feed. The main feed ingredients are corn and soybeans, of which more than 80% of soybeans are imported, which is greatly affected by the international market.

As of May 2021, soybean meal prices have hit a five-year high, and corn is still fluctuating at a high level. According to statistics from China Feed Industry Information Network, the average price of soybean meal in May was 3601 yuan/ton, an increase of 158 yuan/ton from the previous month, an increase of 4.6%; although the price of corn did not rise sharply, it has been operating at a high level of 2,800-2900 yuan/ton.

Funds fled the pig sector

A number of pig companies’ stock prices have been cut in half

With the continuous decline in pork prices, pig-raising companies that had a blowout last year and stock prices also experienced a sharp correction in their share prices.

In addition to Muyuan shares, since the stock price of New Hope (000876.SZ) hit a high point of 28.2 yuan per share on February 22 this year, the closing price on June 23 has fallen to 14.44 yuan per share, with the largest drop of more than 48. %.

New Hope Stock Price
In addition, including Zhengbang Technology (002157.SZ), Tang Renshen (002567.SH) and Wen’s shares (300498.SZ), the decline since the Spring Festival has also been around 30%.

Seeing that the boom of the pig breeding industry is sure to decline, investors have reduced their positions in listed companies in the pig breeding sector.

In early May, Essence Securities Research reported that the active partial stock fund holdings of the agriculture, forestry, animal husbandry and fishery sectors declined from the previous month. Zhongtai Securities Research reported that with the decline in pig prices, the total number of companies allocated by the fund in the top 10 pig breeding sector has also shown a declining trend.

According to data from Oriental Wealth, at the end of June 2019, the number of New Hope shares held by institutions reached a peak of 176.876 million shares. By the end of the first quarter of 2021, there were only 7.63 million shares left; at the end of June 2019, the institutions held Wen’s shares. At the end of the first quarter of 2021, there were only 90.19 million shares left. At the end of June 2019, the number of Zhengbang technology shares held by the fund was 300 million shares, and by the end of the first quarter of 2021, only 55.43 million shares remained.

Red Star News reporter Yu Yao, trainee reporter Yu Dongmei

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