Source: Zijin Tianfeng Futures Research Institute
Core point of view: interval shock is the off-season of pork demand after May Day holiday.FishingbagHowever, the spot price did not fall as scheduled, and the relatively strong spot price gave market confidence, coupled with the off-season demand for fat pigs, but the price difference of standard fertilizer did not turn positive, so the phenomenon of second fertility in the market increased recently, and the supply of small weight commodity pigs was slightly tight. spot prices continued to rebound slightly. But now is not a concentrated second breeding period, at this time, excessive second breeding will increase the pressure of fat pigs in summer, so the recent second breeding will not last long, in addition, it is difficult to increase pork consumption and white strips to increase independently, coupled with the fact that frozen goods inventory is still high, butcher enterprises are mainly shrinking volume and prices under the pressure of losses, so it is difficult for spot prices to continue to rise. There will be no sustained rally on the futures side.
After entering May, corn prices continue to rebound, and the increase in feed costs will also increase the cost of raising end-pressure hurdles and second breeding. Although the current breeding profits have picked up, the profit margin is still small. If feed costs increase, the market will be more cautious in filling hurdles and pressing hurdles, which will reduce the supply pressure in the far month and support the price of pigs in the far month.
Conclusion: although the spot price of live pigs has rebounded slightly due to the increase in the phenomenon of second breeding recently, the spot price of pigs has rebounded slightly, but the LH2409 contract continues to have greater upward pressure after breaking through the 18000 mark, mainly because the profit of 2409 contract is larger, and the rising water of the market is about 2800. The market is more cautious about the space for live pigs to continue to rise, followed by the off-season demand, so it is more difficult for the short-term breakthrough to be 18650 higher, if the second breeding phenomenon cools down in the near future. The disk may face a pullback adjustment, but the range will not be very large. Short-term focus on 18000 support (can do intra-day operation, recommend more single operation, pay attention to stop loss), medium-and long-term 2409 contracts focus on 17500 gate support and multiple entry opportunities, as well as the pressure of the high point 18650 ahead.
Monthly difference of futures contract: wait and see, it is recommended to choose the machine to do 79 sets, the entry point is around-2000, and the stop loss is around-1500.
Futures contract 2409: more short-term focus on 18000 gate support, medium-and long-term focus on multiple entry opportunities of 2409 contract
Supply side: more market pressure hurdle mood cautious, out of the hurdle weight stability, follow-up supply pressure is reduced
Demand side: the operating rate of slaughtering has dropped slightly, the slaughtering profit is still at a loss, and the delivery of goods at the end of the market is weak.
Inventory: the inventory of frozen goods is at a high level, so it is difficult to go to the inventory.
Standard fertilizer price difference: the neutral standard fertilizer price difference is close to 0, which is in line with market expectations.
Cost: excessive corn prices continue to rebound, feed costs increase
Market sentiment: the mood of Eryu in more markets has been strong recently, and spot prices have strengthened slightly, supporting futures prices.
Supply-side analysis
Review of the current price
After May Day, the average spot price of pigs in Henan showed a slight upward trend. after the Spring Festival, the pressure of the market fat pigs alleviated, and the spot prices did not fall as scheduled after the festival. the bullish sentiment and confidence in the market increased, the spot price rebounded slightly, and the 2409 contract fluctuated slightly above the 18000 mark this week, although the spot market mood was relatively warm. However, the futures market is relatively rational and the market is more cautious about the long term.
Review of piglet price
Because the market is worried that the strong piglet fencing sentiment in March and April will exert pressure on pig supply in the third quarter, and is not optimistic about the future demand, piglet fencing is more cautious after May Day, and piglet prices are stable as a whole. A small number of areas fell slightly. However, the price of binary sows (mainly with piglets) shows an increasing trend, mainly because the current binary sows correspond to the peak demand season in the fourth quarter, and the market is more optimistic, so the price of binary sows rises slightly. On the whole, the current level of the market and the emotional mentality of production capacity expansion are more cautious, and they are cautiously optimistic about pig prices in the future.
Market review
Can reproduce sows and keep them warm up slightly.
According to the statistics of Mysteel sample enterprises, the stock of fertile sows was 485 in April.Fishingbag760000 head, up 0.87% from the previous month, down 4.59% from the same period last year. In addition, Yongyi data showed that the stock of sows increased by 0.96% in April compared with the previous month, while
Data from the Ministry of Agriculture show that the stock of fertile sows dropped to 39.92 million in March, down 7.27% from the same period last year. The stock of fertile sows announced by the Ministry of Agriculture and villages in April is expected to decline slightly from March, but by a small margin.
The monthly stock data of sows in the tripartite consulting institutions of Steel Union, Zhuochuang and Yongyi all increased slightly compared with the previous month. From the market point of view, the market confidence was restored, the price of live pigs was relatively stable, and the future was cautiously optimistic. Therefore, theoretically, the stock of sows increased in April.
On the whole, the stock of sows in April and May is expected to be stable.
The elimination volume of sows decreased month-on-month, and the price rose slightly.
According to Mysteel sample data, the elimination of large-scale field-capable sows in April was 108000, down 1.2% from the previous month and an increase of 3.17% over the same period last year. Although the price of piglets fluctuated slightly in April, but the profit is still high, coupled with the breeding end is relatively optimistic about the future, the willingness to take the initiative to eliminate is not strong, some enterprises are in the phenomenon of supplementary hurdles, and the supply of sows in the market is slightly tight. therefore, the price of eliminated sows shows a strong trend, and the phenomenon of second breeding in the market in the near future may lead to a slight strengthening of sow prices. On the whole, the market is still relatively cautious, and the elimination of domestic sows is expected to remain stable in May.
Production index continued to pick up in April
The production index of sows and live pigs continued to improve in April. Among them, the mating delivery rate, litter size, delivery room survival rate and piglet survival rate increased by 0.7%, 0.1 head / litter and 0.2% respectively.
The production index continues to pick up, mainly because the market is cautiously optimistic about expectations. The second quarter is the peak season for fencing at the breeding end, and the demand for fencing is still strong, so the breeding farm mating delivery rate is increased, the impact of superimposed winter blight is weakened, and the breeding cost continues to be reduced. Enterprises attach high importance to non-prevention work, so the production index continues to increase month-on-month in April. The number of piglets is expected to increase month-on-month in May.
The number of enterprise hurdle plans increased month on month in May.
According to the sample survey, the completion rate of large-scale enterprises in April was 98.25%. The sales speed was slow due to the early active and passive pressure, and the completion rate was not achieved in April. In the case of profits, the group enterprises completed the listing plan well. In May, the group plans to put out 10.543 million columns, an increase of 5.1 per cent from the previous month. There is a demand for Dragon Boat Festival stock in late May, and small and medium-sized retail investors account for a relatively small number of fattening pigs, so large-scale enterprises are expected to increase in May.
In April 2024, 18 listed companies sold a total of 12.3 million commercial pigs (including piglets), a decrease of 5.4% from March, of which Muyuan sold 5.45 million live pigs, a slight decrease of 0.38% from the previous month, an increase of 2.02% over the same period last year. In April, the number of pigs released by listed companies fell from the previous month, mainly because the company was cautiously optimistic about market expectations, with moderate hurdles, but the range was not large.
Feed sales decreased in April compared with the previous month.
In April 2024, total pig feed sales fell 3.69% from the previous month, down 16.99% from the same period last year; sow feed sales rose 2.02% from the previous month, down 11.95% from the same period last year; piglet feed sales increased by 0.01% month-on-month, down 10.3% from the same period last year; fertilizer sales fell 5.94% month-on-month and 19.79% from the same period last year. The month-on-month increase in sow feed and piglet feed sales is mainly due to the fact that some farms are more optimistic about the future pig prices and are active in fencing in the first quarter; the month-on-month decline in fertilizer sales lies in the high enthusiasm of retail investors before May Day, and the fencing of some early second big pigs, resulting in a decline in demand for breeding fertilizer. from a year-on-year point of view, pig feed at all stages is lower than that in April last year, so the pig production capacity in April this year is lower than that in April last year.
Recently, corn and soybean meal prices have continued to rebound, with an average increase of 10-20 yuan / ton in corn week in the northern port, 20-30 yuan / ton in soybean meal week, 0.2 yuan / kg in average pig feed price this week, and an increase in breeding feed cost. increase farming upright price is expected.
Demand side and inventory analysis
The operating rate of slaughtering enterprises decreased compared with the same period last year and month-on-month.
Mid-May is still in the off-season of demand. The start rate of sample slaughtering enterprises on May 14 was 28.12%, down 0.4 percentage points from the first ten days of May, and the opening rate of slaughtering enterprises in May was 28.5%, down 3.5 percentage points from the same period last year. In the short term, there is a lack of positive support for terminal demand, and it is expected that the market share will still be weak. The decline in pork demand this year is due to the macro part of the reason, and the second is that slaughtering enterprises are losing money at the present stage, coupled with the high inventory of frozen products, slaughtering enterprises are mainly selling and slaughtering fresh sales, and there is no major storage action. It is expected that pork demand will be boosted by the demand for stock during the Dragon Boat Festival in late May.
Slaughtering profits continued to lose money, and inventory of frozen goods fell slightly.
As of last Thursday, the storage rate of frozen goods in key domestic slaughtering enterprises was 23.97%, down 0.02 percentage points from the previous week. As the slaughtering enterprises continue to lose money on slaughtering profits, reduce the opening rate, actively clean up inventory, and reduce the price of some temporary products, but because the market demand for frozen goods continues to be weak, and the delivery of goods is relatively slow, the overall effect of reducing frozen goods inventory this week is not obvious. There is no obvious positive support for the frozen products market next week, the boost to the demand for frozen products is limited, and the superimposed butcher enterprises are still not divided into warehousing operations. it is expected that the storage rate of frozen products in China may maintain a slow pace of de-storage next week.
The weight of the hurdle is slightly higher, but the range is limited.
According to Mysteel statistics, as of May 13, the average weight of three-yuan live pigs across the country was 122.87 kg, down 0.02 kg from the previous week, 0.16% from the previous week, and 0.76% from the same period last year. Since April, due to differences in the market on whether Eryu has excess pressure on April and May supply after the Spring Festival, coupled with the fact that spot prices maintain a narrow range of fluctuations, and the market pressure column is more cautious, this batch of Eryu began to come out one after another after the Spring Festival. in addition, the weather continues to turn hot, the demand for fattening pigs weakens or speed up the fattening of pigs, so the weight of the column shows a downward trend in the near future.
However, with the recent increase in the mood of the second child, it is expected that the weight will gain again next week.
The price difference of standard fertilizer continues to narrow.
As of Thursday, the average price difference of national standard fattening pigs was-0.02 yuan / kg, which was 0.02 yuan / kg higher than that of the previous week. Recently, the price difference of standard fertilizers was close to zero, mainly because the demand for fattening pigs decreased with the heat of the weather. In April, the second breeding households came out one after another, and the supply pressure of fattening pigs decreased. According to the usual year, the price difference of standard fertilizers in the second quarter should become positive, but since April, the price difference of standard fertilizers has not turned positive. It shows that there is no surplus of fat pigs in the second quarter, which is also the recent post-holiday spot price stability, the market began to second breeding again.
Basis difference of price difference and technical analysis
The rebound of feed cost drives the recovery of pig futures.
As LH2409 is a contract in the peak season of demand, the disk shows a sharp rise in water structure, the current pig breeding cost of about 16 yuan / kg, 2409 of the disk profit of about 2000. Due to the fattening period from April to May, the commercial pigs delivered in the 2409 contract correspond to the piglets fenced in April, so the late factors affecting the disk profit of the 2409 contract are mainly feed costs and pig prices. The spot market is relatively conservative for pig prices in the second half of the year, so if forward futures prices rise too fast, the willingness to hedge and lock prices at the breeding end will be enhanced, and there will be a certain degree of pressure.
79 price spread recent bottom concussion
As of May 15, 79 contract spreads continued to decline to-18150, 79 contracts as a whole showed volatility recently, the recent market Eryu phenomenon increased spot relatively strong and slightly stronger, slightly stronger in recent months, but because the main funds in 2409 contracts, plus 09 contracts is the peak season of demand, so 79 contract spreads did not rebound with the trend. The 79 spread corresponds to Eryu arbitrage, and the market in the third quarter of this year is between 2023 and 2022, so the 79 spread is expected to continue to expand by a limited range, with an entry point around-2000 and a stop loss around-1500.
2405 contract spread continues to rise
As of May 15, the LH2407 contract rose 900yuan / ton, showing a volatile trend recently, mainly due to the strength of short-term spot prices, market concerns about the recent pressure on the supply caused by the recent hurdle and Eryu in July, and the futures trend is mainly volatile. If spot prices can maintain stability, in the case of a small rise in water, it will support 2407 contracts strongly.
As of May 15, the rising water of the LH2409 contract is about-2800, which is the average of the same period in recent years. If the basis is less than-3000, hedging can be considered.
2409 Technical Analysis of contract
This week, 2409 contracts fluctuated slightly above the 18000 gate, the trading volume continued to decrease, the wait-and-see was stronger, and the market was more rational. Although MACD was above the 0 axis, the energy pillar was small, the uplink power was insufficient, short-term shocks were dominant, and attention was paid to the 18000 barrier support.
