In the first half of the year, pig prices fell sharply, and most farms suffered losses in hog business

By CnAgri2018-07-18 13:49:10 Print In the first half of 2018, hog market kept sluggish continuously. Hog prices began to decline sharply in March, and fell below the cost line from April to May. The self-supporting farms and farmers fattening out-sourced piglets suffered losses. Recently, listed breeding companies successively released interim results announcements, and most companies reported losses in pig business.
On July 10, Wens disclosed the semi-annual performance forecast, and expected that the profit in the first half of 2018 is RMB 850-950 million, down 47.52%-53.04% over the same period of the previous year. The profit mainly came from broiler business. In the first half of 2018, the average price of the company's commercial broilers increased by 58.16% year-on-year, resulting in a year-on-year growth of 175.43% in the profit of chicken rearing business. The sales volume of commercial pigs grew by 15.44% year-on-year, but the price decreased 24.06% year-on-year and the low price continued for a long time, so the business performance of pig business turned grains into slight losses.
In addition, Muyuan issued an announcement that the company's net profit for the first half of the year is expected to be -85~-75 million yuan, decreasing 107.1~106.3% from 1.2 billion yuan in the same period of the previous year. Zhengbang announced that the company's first-half net profit loss is expected to be 160~200 million yuan. Truein Group released an early warning announcement that the decrease of net profit may be as high as 50%.  New Wellful estimated that it will suffer a loss of 35-53 million yuan in net profit.
Recently, domestic pig prices started to rise, but from the supply of hogs in domestic, hog capacity hasn’t been reduced effectively and the supply is still sufficient relatively.
BOABC believes that the rise in hog prices is more seasonal rebound, and it doesn’t mean that hog prices have entered a new rising cycle. It’s estimated that hog prices will be about 12-13yuan/kg in the second half of 2018, and hog farming companies or will go out of losses.
It is worth noting that if pig production is out of losses and hog capacity can’t be cut down effectively in the second half of the year, pig prices or will decrease further and farming enterprises will suffer serious losses in 2019.