Steady "meat bowl" depends on feed pricing

"As long as you stand in the wind, pigs can fly to the sky." The price of pork successfully counterattacked in May was given the expectation of the beginning of the "pig cycle". However, to stabilize the "meat bowl" in hand, we need to further enhance the internationalization of China's futures market.

May was the off-season for hog consumption, but pork prices, which have been falling for several months, ushered in a strong rebound. Data from the National Bureau of Statistics shows that in early May, the price of pork (hind leg meat) rose by 0.77 yuan per kilogram from the previous cycle, an increase of 3.6%. In mid-May, pork prices continued to rise by 1.7 yuan / kg to 23.69 yuan / kg, an increase of 7.7%. In the same period as the price of pork, but the price of eggs increased earlier, the increase in 10 days in mid-May also reached 6.3%, the price of fresh eggs in bulk has reached 11.57 yuan / kg.

Behind the rebound in the off-season is the eagerness of farmers to desperately want to rise. Because it has fallen all the way from the fourth quarter of last year, although the country initiated two temporary collections and storages, the pork price in April still reached a new low. By mid-April, the loss reached an extreme value, and a pig would lose 370 yuan. Pig history is rare. Affected by this, the sow inventory fell by 1.05 million heads that month, a cumulative drop of 7.72%, exceeding the 10-year average of 3.6 percentage points, the largest drop since the Ministry of Agriculture has monthly data.

Today, pork prices have risen, but still only 70% of the all-time high. The price of pig feed has once again reached an all-time high. From the perspective of feed raw material prices, wheat prices are still at historical highs, and the prices of corn, soybean meal, rapeseed meal and cotton meal have all risen in small steps and are at historically high levels.

At present, the scale of domestic feed demand has increased significantly. As the main raw material of soybean meal, the number of soybean imports continued to reach a record high. In the first four months of this year, a total of 21.85 million tons of soybeans were imported, an increase of 41% from 15.47 million tons in the same period last year, a rare increase. The dry distiller's grains used to produce animal feed imported 2 million tons in the first four months, equivalent to half of last year's imports.

Obviously, the "meat bowl" in Duanwen's hands depends on improving the voice of the upstream feed industry in the domestic industry, especially in the current pig feed supply and price issues, and the international market still dominates. China is the world's largest buyer of soybean meal, with an annual demand of about 80 million tons, of which 80% depends on imports, and most of the imports depend on US futures pricing. Domestic soybean meal and soybean oil prices also closely follow the trend of US soybean prices.

In this process, American hedge funds have earned enough silver from China, and the Chinese market has played a more passive role. To change the status quo, it is necessary to further increase the internationalization of the domestic futures market and realize a new pattern of home-based combat and me-oriented pricing.

If not, who can be sure that pork prices will not fly into the sky under the influence of extreme weather such as El Niño? This situation happened once in 2008. I hope that this time the price of pork will rise, but in the context of the domestic macroeconomic colder, it is just going through a small cycle rather than flying to the sky.