In-depth Report: The average price of live pigs in the second half of the year is likely to remain in a high range.

【Summary Description】 Looking ahead to the second half of the year, with the slow recovery of live pig supply and gradually improving demand, the average price of live pigs is likely to remain in a high range. The average ex-farm price is expected to fluctuate between 30 and 40 yuan per kilogram. In terms of timing, the price trend may show a volatile yet strengthening pattern in the third quarter and a volatile yet weakening pattern in the fourth quarter.

Looking ahead to the second half of the year, with the slow recovery of live pig supply and gradually improving demand, the average price of live pigs is likely to remain in a high range. The average ex-farm price is expected to fluctuate between 30 and 40 yuan per kilogram. In terms of timing, the price trend may show a volatile yet strengthening pattern in the third quarter and a volatile yet weakening pattern in the fourth quarter.
　　
　　On the supply side, given the relatively small base of breeding sows this year and the resulting decline in industry MSY (meat per sow per year), it is expected that hog shipments in the second half of the year will struggle to recover as anticipated. Consequently, annual hog shipments are projected to still decline by nearly 30% year-on-year. However, considering a 10% year-on-year increase in average live weight per hog, the annual pork supply is forecast to drop by about 20%. In addition, imports and releases from strategic reserves will to some extent boost the overall pork supply. Looking at the supply rhythm, based on estimates derived from the structure of breeding sow stocks, piglet stocks, medium-sized pigs, and large pigs—and taking into account this year’s specific circumstances and adjustments to breeding cycles—we anticipate that hog shipments will decline month-on-month in July and August, but will gradually increase starting from September.
　　
　　On the demand side, pork consumption remained weak in the first half of the year due to the impact of the pandemic and a seasonal decline in demand. Currently, the impact of the pandemic is gradually easing, and downstream demand is on the rise. Additionally, from a seasonal perspective, as temperatures drop after July, pork consumption will enter its peak season. We expect pork demand to improve gradually quarter-on-quarter in the second half of the year.
　　
　　In terms of substitutes, due to overcapacity and the impact of the pandemic, low-priced alternatives such as broiler chickens and eggs suppressed demand for pork in the first half of the year. However, as the price centers of these substitutes shifted upward in the second half, this provided some support for pork prices. Pig prices 。
　　
　　Risk factors: African swine fever epidemic, COVID-19 pandemic
　　
　 　I. Review of Market Performance in the First Half of the Year
　　
　　Born in the first half of 2020 Pig prices The operation can be roughly divided into three phases. In the first phase, after the Spring Festival, transportation was disrupted due to the impact of the COVID-19 pandemic, and production... Pig prices A slight upward trend began in the second phase, from late February to mid-May. Affected by the COVID-19 pandemic, downstream demand declined, while large-scale imports and the release of frozen pork into the market further weighed on pig prices, causing them to fluctuate broadly and weaken overall. As pig prices fell, market expectations shifted, and the psychological threshold for farmers was temporarily breached, triggering panic selling that pushed prices even lower—reaching as low as 24 yuan per kilogram at one point. However, as pig prices nearly fell below the cost line for purchased piglets, farmers’ willingness to hold onto their pigs and resist selling intensified, leading to a modest rebound in pig prices by late May. In the third phase, from late May to the present, on the one hand, farmers have been reluctant to sell and have been propping up prices; on the other hand, earlier heavy sales have led to a decline in the supply of market-ready pigs, making it increasingly difficult for buyers to secure supplies. Coupled with the outbreak of COVID-19 in Beijing, which has reduced demand for frozen pork, pig prices have continued to rebound. As of June 19, the average national price of live pigs in 22 provinces and cities reached 33.76 yuan per kilogram, up 22.27% from the May low of 27.61 yuan per kilogram.

II. Market Analysis for the Second Half of the Year
　　
　　(1) Supply Side: Overall, capacity remains low, and the supply rhythm will first decline and then rise.
　　
　　1. Looking at supply from the perspective of breeding sows, production capacity is starting to recover; however, the decline in MSY has resulted in a slower-than-expected pace of capacity recovery.
　　
　　The sow inventory has shown consecutive month-on-month increases, signaling the beginning of a recovery in production capacity. According to data from the Ministry of Agriculture and Rural Affairs, in May, the inventory of breeding sows increased by 3.9% month-on-month, declined by 5% year-on-year, and was down 25% compared to pre-African swine fever levels. Sample data from Yongyi Information show that in May 2020, the inventory of breeding sows among sampled enterprises reached 6,653,590 heads, up 1.21% month-on-month but down 20.71% year-on-year, and 38.96% lower than pre-African swine fever levels. Based on the typical pig-raising cycle, an increase in the breeding sow inventory in a normal year corresponds to a rise in pig shipments 10 months later. Calculating according to this 10-month cycle, pig shipments are expected to start steadily increasing from August 2020. Considering the higher average weight of pigs shipped this year, and adjusting for the longer raising cycle—equivalent to an 11-month period—we anticipate that pig shipments will begin to increase starting from September 2020.
　　
　　The recovery of production capacity has been slower than expected following the decline in MSY. MSY refers to the productivity of sows—the number of market-ready pigs a sow can produce annually. There are two methods for calculating MSY: the direct method and the reverse-engineering method. The direct method is calculated as follows: MSY = PSY × Piglet Survival Rate (Note: PSY represents the number of weaned piglets produced per sow per year, and it is an important indicator for measuring farm efficiency and sow reproductive performance). The reverse-engineering method is calculated as follows: In 2020, MSY = Total number of pigs marketed in 2020 ÷ (Number of breeding sows in March 2019 – Number of breeding sows in February 2020).
　　
　　Since 2010, the domestic MSY (meat yield per sow) has shown an upward trend. Around 15 years ago, MSY experienced significant fluctuations. Before 2015, China’s pig farming was primarily driven by small-scale individual farmers, and MSY remained relatively stable, hovering between 13.5 and 15. After 2015, large-scale farming began to develop rapidly, and farming practices... Technology With improvements, the domestic MSY has seen a rapid increase, reaching an average level of 18 to 20 by the 17/18 year. This also helps explain the continued decline in the number of breeding sows held since 2016, yet the number of pigs marketed for slaughter has not declined.
　　
　　Why consider MSY? It’s because when MSY is at a stable level... Pig Cycle Among them, the supply of live pigs can be inferred based on changes in the inventory of breeding sows. However, when the MSY (meat production per sow per year) changes, the analytical framework based on fluctuations in the breeding sow inventory will exhibit significant deviations. And in this round... Pig Cycle The biggest change during the capacity recovery phase stems precisely from the shift in MSY. The African swine fever epidemic has severely damaged the breeding stock of grandparent herds and two-way sow herds, leading the entire industry to rely on three-way sows for breeding purposes. Under normal circumstances, three-way sows would not be retained for breeding—but the ASF epidemic has caused this situation. Breeding pigs Amid massive mortality and a severe shortage in the supply of two-way crossbred sows, farmers of all types have begun adopting the three-way crossbreeding method for breeding stock. However, grassroots surveys reveal that using three-way crosses for breeding significantly reduces production efficiency, with the industry’s MSY (mean sow productivity) declining by more than 40%. According to data from Yongyi, in April 2020, the proportion of prolific sows bred via three-way crosses reached 44%. Based on these figures, we estimate that the 2020 piglet output will decline by around 30% year-on-year.
　　
　　In summary, in absolute terms, the current number of breeding sows has declined significantly compared to the pre-African swine fever period. Although live pig shipments began to recover in the fourth quarter, due to the small base figure, a decline in MSY (meat per sow per year), and a slower-than-expected pace of capacity recovery, live pig shipments remain at low levels.
　　
　　2. Looking at the supply rhythm from the perspective of inventory structure: Inventory declined month-on-month before rising, and we expect hog shipments to first decline and then rebound in the second half of the year.
　　
　　The current sow inventory corresponds to the supply of market hogs six months from now. According to sample enterprise data from Yongyi Information, in January, February, and March 2020, the month-on-month changes in piglet inventories were -0.91%, -1.14%, and -1.13%, respectively. Based on the growth cycle, hog shipments in the third quarter are expected to continue declining month-on-month. However, in April and May, the month-on-month changes in piglet inventories were 0.67% and 2.84%, respectively, suggesting that hog shipments in the fourth quarter will gradually increase, with accelerating growth rates.
　　
　　From the perspective of medium- and large-sized pigs, supply trends once again confirm that piglet shipments in the third quarter first declined and then rebounded. Changes in the inventory of large pigs correspond to piglet shipments two months later, while changes in the inventory of medium-sized pigs correspond to piglet shipments four months after those changes. Based on this, referring to Yongyi Information’s data on hog inventory structure, we find that in May, the inventory of large pigs decreased by 4.32% month-on-month and by 38.02% year-on-year. Consequently, we can infer that piglet shipments in August will decline month-on-month. Meanwhile, in May, the inventory of medium-sized pigs increased by 2.84% month-on-month but decreased by 21.05% year-on-year; therefore, we expect the inventory of medium-sized pigs to start growing month-on-month in September.
　　
　　3. Looking at the average live weight at market: The increase in average live weight partially offset the decline in the number of animals marketed.
　　
　　Domestic hog supply equals the number of hogs marketed multiplied by the average market weight per hog. Therefore, in addition to monitoring inventory levels and replenishment indicators as well as inventory structure, it’s also crucial to pay attention to the factor of average market weight. According to data from Zhuochuang Information, the average market weight of hogs has significantly increased. As of May 2020, Zhuochuang data showed that the average market weight of hogs marketed was 132 kg, up 13% from 117 kg in the same period last year. Looking at the annual average, from January to May 2020, the average market weight of hogs marketed rose by 10.96% year-on-year. Considering the increased difficulty in restocking this year and the persistently high pork prices, we expect the average market weight to remain elevated over the long term. It is projected that the annual average market weight will increase by around 10% year-on-year, partially offsetting the impact of a decline in the total number of hogs marketed.
　　
　　4. Increased import volumes combined with increased release of reserve meat are boosting market supply.
　　
　　Data released by the General Administration of Customs of China show that in May, the country's total pork imports reached 370,000 tons. From January to May, cumulative imports totaled 1.72 million tons. Compared with the same period last year, May imports increased by 86.2%, and cumulative imports rose by 146.2% year-on-year. Regarding the release of reserve meat, the most recent release occurred on June 18, with a volume of 10,000 tons; in 2020, the cumulative release amounted to 390,000 tons.
　　
　　(2) On the demand side, the pandemic and substitute products have affected demand for live pigs, resulting in a year-on-year decline, though month-on-month conditions are gradually improving.
　　
　　Regarding hog demand in the second half of the year, we will analyze it from two perspectives: first, the impact of pork prices themselves on consumption; second, the influence of alternative protein prices. Finally, we’ll also consider price trends from a seasonal perspective.
　　
　　1. The pandemic impacted pork consumption in the first half of the year, but demand is expected to gradually recover in the second half.
　　
　　Under the impact of the COVID-19 pandemic, demand for live pigs has declined sharply. In terms of slaughter volume, from January to May 2020, the total slaughter volume of designated pig enterprises nationwide amounted to 48.98 million head, a year-on-year decrease of 34.67%. However, looking at month-on-month changes, the impact of the pandemic appears to be waning, and downstream demand is gradually recovering. In May, the slaughter volume reached 13.85 million head, representing a substantial increase compared to the previous month. Slaughter volumes in February and March were 8.32 million and 11.71 million head, respectively. It is expected that demand will continue to recover in the second half of the year. According to a special survey on the COVID-19 pandemic conducted by the China Household Finance Survey and Research Center at Southwestern University of Finance and Economics from February 25 to March 21 among 3,143 nationally representative households, the results showed that 39.3% of households reported planning to reduce their consumption in 2020. Among these households, 7.8% anticipated a reduction of more than 50%, 16.6% expected a reduction of over 30%, and 31.6% projected a reduction of more than 10%.
　　
　　2. In the first half of the year, low-priced substitutes dampened demand for pork; in the second half, rising prices will to some extent boost pork prices.
　　
　　Born last year Pig prices The sharp rise in demand directly spurred a rapid expansion of production capacity for other protein sources with shorter growth cycles—particularly laying hens and broiler chickens. After the 2020 Spring Festival, overcapacity led to prolonged low prices for broiler chickens and eggs. Looking at the price ratio between pork and broiler/chicken/egg prices, although pork prices have not reached new highs, their relative price has approached historical peaks, even surpassing the peak level seen in October last year. Consequently, we expect that the relatively low prices of alternative animal proteins will exert greater downward pressure on demand for pork. However, looking ahead to the second half of the year, the continued deterioration of profit margins in the first half for alternative protein sources—such as broilers and laying hens—will drive a reduction in production capacity during the second half. As a result, we anticipate that the price center of gravity will shift upward, providing some support for pork prices.
　　
　　3. Judging from seasonal price trends, hog prices in the second half of the year are expected to fluctuate and move upward.
　　
　　From a seasonal consumption perspective, China's raw... Pig prices The seasonal characteristics are fairly distinct. With the exception of certain special years in which price trends throughout the year were relatively “abnormal” due to pandemics or policy changes, raw... Pig prices The data generally show a fluctuating pattern characterized by relatively high prices at the beginning and end of the period, with lower prices in the middle. Specifically, prices were higher in January and February, began to decline in March, reached their lowest point for the year in May and June, started recovering in July and August, and then continued to rise further after November, peaking at the end of the year. Therefore, from a seasonal perspective, pork prices are in a strengthening phase during the second half of the year.
　　
　　Looking at the seasonal price trends of substitute products, beef, mutton, and egg prices all showed seasonal increases in the second half of the year, providing some support to raw materials. Pig prices 。
　　
　 　III. Outlook for the Live Pig Market in the Second Half of the Year
　　
　　Looking ahead to the second half of the year, with the slow recovery of live pig supply and gradually improving demand, the average price of live pigs is likely to remain in a high range. The average ex-farm price is expected to fluctuate between 30 and 40 yuan per kilogram. In terms of timing, the price trend may show a volatile yet strengthening pattern in the third quarter and a volatile yet weakening pattern in the fourth quarter.
　　
　　On the supply side, given the relatively small base of breeding sows this year and the resulting decline in industry MSY (meat per sow per year), it is expected that hog shipments in the second half of the year will struggle to recover as anticipated. Consequently, annual hog shipments are projected to still decline by nearly 30% year-on-year. However, considering a 10% year-on-year increase in average live weight per hog, the annual pork supply is forecast to drop by about 20%. In addition, imports and releases from strategic reserves will to some extent boost the overall pork supply. Looking at the supply rhythm, based on estimates derived from the structure of breeding sow stocks, piglet stocks, medium-sized pigs, and large pigs—and taking into account this year’s specific circumstances and adjustments to breeding cycles—we anticipate that hog shipments will decline month-on-month in July and August, but will gradually increase starting from September.
　　
　　On the demand side, pork consumption remained weak in the first half of the year due to the impact of the pandemic and a seasonal decline in demand. Currently, the impact of the pandemic is gradually easing, and downstream demand is on the rise. Additionally, from a seasonal perspective, as temperatures drop after July, pork consumption will enter its peak season. We expect pork demand to improve gradually quarter-on-quarter in the second half of the year.
　　
　　In terms of substitutes, due to overcapacity and the impact of the pandemic, low-priced alternatives such as broiler chickens and eggs suppressed demand for pork in the first half of the year. However, as the price centers of these substitutes shifted upward in the second half, this provided some support for pork prices. Pig prices 。
　　
　 　IV. Risk Factors
　　
　　1. African Swine Fever Outbreak: If the ASF outbreak continues to spread in the second half of the year, it will, in the long term, hinder the recovery of hog production capacity, thereby supporting hog prices. In the short term, however, it could lead to a sell-off of hogs, putting downward pressure on hog prices.
　　
　　2. COVID-19 Pandemic: If the COVID-19 pandemic continues to spread and affects pork consumption, it will weigh on pork prices.