On the evening of January 7, the announcement issued by Jin Xinnong showed that the company will sell a total of 104 live pigs in 2023690,000 heads, a year-on-year decrease of 1667%；The cumulative pig sales revenue is about 123.8 billion yuan, a year-on-year decrease of 3195%。Previously, leading pig enterprises Muyuan Co., Ltd., Wen's Co., Ltd., Dabeinong Co., Ltd., etc., successively released the annual production and sales data for 2023. Among them, Muyuan shares sold 6381 live pigs60,000 heads, a year-on-year increase of 427%；Achieved 1082 pig sales revenue1.7 billion yuan, a year-on-year decrease of 964%。Wen's shares sell 2626 pigs220,000 heads, a year-on-year increase of 4665%；Achieved 462 pig sales revenue5.6 billion yuan, a year-on-year increase of 1267%。Dabeinong sells 604 live pigs870,000 heads, a year-on-year increase of 3650%；Achieve 966 billion yuan, a year-on-year increase of 292%。
An interviewee told the reporter: "In 2023, China's pig market is still in the stage of grinding the bottom of the pig cycle, from the perspective of the pig end, 2023 is the third industry loss year, the first three quarters showed a slow trend of de-capacity, and the Ministry of Agriculture can reproduce the number of sows decreased by 3."4%；In the fourth quarter, the bullish expectations of the breeding end were disappointed, the cash flow was tight and the catalytic effect of the epidemic was superimposed, and the industry entered the stage of accelerated production capacity. From the demand side, the total slaughter volume in 2023 will be the highest in the past five years, and the total consumption is acceptable as a whole, but the downstream consumption of live pigs is soft, and the elasticity of spot is insufficient. ”
Some companies have cash flow problems
Although some pig companies will continue to promote the reduction of production capacity in 2023, it is undeniable that the current pig production capacity is still in a state of surplus.
In this case, some pig enterprises have the problem of increasing the asset-liability ratio. According to the research report of Southwest China, the overall debt ratio of the pig breeding industry has increased from 53 at the beginning of 20215% climbed to 68 in Q3 20233%。In addition, due to the continued price of hogs and piglets after August 2023, the industry's debt ratio is expected to further increase in the fourth quarter.
A listed pig company in East China said that since 2023, the company has continued to have a tight cash flow problem. Although the financial pressure will be alleviated with the implementation of the reorganization plan, the company still needs a certain amount of time to complete the repair of the credit system, and it is difficult to achieve the business goal of "efficient recovery of business operations and rapid improvement of profitability" by relying only on the funds invested by the reorganization investors.
Zhu Zengyong, a researcher at the Beijing Institute of Animal Husbandry and Veterinary Medicine, Chinese Academy of Agricultural Sciences, told the reporter: "The pig industry is an industry with heavy assets and a long capital turnover time, and has entered a period of low profits. "In such a situation, some pig enterprises have stopped their plans to increase production capacity.
In addition to restoring the normal operation of the company through reorganization, the listed pig enterprises ensure that the company's cash flow is sufficient through capital operation. For example, recently, a listed pig company in central China decided to terminate the relevant fund-raising project, and intends to use the remaining raised funds to permanently replenish liquidity. The company said that since the second half of 2021, the domestic pig market has continued to be sluggish, the market environment has changed, and the industry has been in a loss cycle for a long time.
In addition, Xingyuan Agriculture and Animal Husbandry announced on January 5 that it would ** the company's pig-related business. Xingyuan Agriculture and Animal Husbandry said that considering that in the context of labor costs, feed raw materials, and long-term sluggish pig prices, the production and marketing of live pigs are seriously separated, and there is great uncertainty about the future of live pigs. In order to further reduce debt and achieve sustainable development, the company intends to make further adjustments to its existing business.
The pig industry will no longer have huge profits, and the main body of breeding that can effectively reduce costs can bring certain profit margins to themselves. Zhu Zengyong further explained: "Only after the supply and demand of pigs transition from relative surplus to balance, the pig industry begins to enter a virtuous cycle, and the fluctuation range of pigs will be significantly stable." With the progress of enterprise breeding technology and the decline of breeding costs, the overall profitability of the industry will be guaranteed. ”
Whether 2024 can usher in an inflection point
Yang Xiaoxia, senior researcher of Hehe**, believes that under the process of de-production of live pigs in 2023, the number of live pigs in 2024 will decline month-on-month, but the production capacity is still higher than the normal holdings, and the frozen product inventory is high this year. In the short term, it is difficult to have a large number of live pigs in the first half of 2024, focusing on whether there will be an inflection point in the second half of the year, and it is expected that the pig market in 2024 may be stronger than in 2023.
According to Boya and Xun data, on January 5, the pig **1399 yuan kg, week-on-week **127%；15 kg piglets**2034 yuan kg, week-on-week **198%。
An interviewee told the ** reporter: "In January 2024, pig prices may continue to fall. Judging from the number of breeding and the number of newborn piglets in the early stage, the actual pork ** will not decline sharply in January. From the inventory point of view, the average weight of commercial pigs slaughtered last week was 12430 kg, the average weight after slaughter has been higher than 91 kg for more than two consecutive months, and the industry's live inventory level is relatively high, which also means that the pressure is still in the short term. The current supply of standard fertilizer is booming, which will still suppress the performance of pig prices in January. ”
The research report believes that because the problem of overcapacity is still there, the upside should not be overly optimistic, and the upward road of pigs is relatively difficult and long.
In the face of operating pressure, a number of listed pig companies said that the company will reasonably arrange the rhythm of production and operation according to the external market environment, continue to reduce costs and increase efficiency, and improve the company's profitability. There are also listed pig companies that say that the sharp fluctuations in the spot of live pigs have brought great uncertainty to the operation of enterprises. The company can use the pig to lock in the long-term and breeding profits, hedge the risk of pig and breeding profit fluctuations, ensure the safety of the company's cash flow, and achieve the goal of stable operation of the enterprise.
Wang Zehua, an analyst at Founder**, believes that at the beginning of 2024, pig prices will continue to be sluggish in 2023, continue to decline and the decline will widen. The continuous reduction of breeding profits has made the losses of pig breeding enterprises continue to expand, and some enterprises have suspended capital investment in capacity expansion projects. Under the influence of the pressure on corporate cash flow and the impact of epidemics such as non-plague, enterprises may accelerate the reduction of production capacity. In the short term, it is difficult for the breeding end to achieve profitability, and pig prices are expected to stabilize and rebound in the second half of 2024.
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