In September 2023, our country lifted the 15-year-old temporary ban on African swine fever imposed on Russia. On January 24, 2024, the General Administration of Customs (GAC) Announcement No. 11 of 2024 was issued to allow the import of Russian pork (including edible pig by-products) that meet the relevant requirements. According to the official Union of Russian Pig Farming, Russia imports 15-200,000 tons of pork to our country every year. So, what is the impact on pigs?
OneIntroduction to hogs
Hog ** is a ** contract with hog as the targetIt has been listed on the Dalian Commodity Exchange on January 8, 2021。The Dalian Commodity Exchange has become the world's first exchange to carry out hog trading, following the lean hogs of the Chicago Mercantile Exchange in the United States, the hogs of the Hannover Mercantile Exchange in Germany** and the lean hogs of the Korea Exchange**. As shown in the figure below:
Dalian Commodity Exchange.
As shown in Figure 1, the hog ** transaction ** is LH, the trading unit is different from most varieties, it is 16 tons of lots, and the minimum price change is 5 tons of lots. Therefore, a change of one point is $90. It should be noted that the contract delivery month of hog ** is mainly odd-numbered months.
Pigs** IIUpstream and downstream industries of pigs
The upstream industries of pigs mainly include feed, vaccines, veterinary drugs, piglets and other industries. For pigs, in addition to the quality of piglets determines the quality of meat, the ratio of feed, the efficacy and effect of vaccines and veterinary drugs also determine the survival rate of piglets. Therefore, the three together constitute the upstream of the pig industry chain. The midstream link is mainly the breeding of piglets, which requires professional personnel to cultivate, health management and so on. The downstream is mainly the consumer-oriented consumption end, such as the raw meat end of restaurants and vegetable markets, and the pork non-staple food end of canned food and other products.
IIIInfluencing factors of pig **
On the supply side, we found that soybean meal may affect the cost of pigs, the reason is that whether it is a large-scale breeding enterprise or a breeding, the cost of feed accounts for about 50% of the cost of pig breeding. As shown in the figure below:
Dashang Institute pig education materials.
Dashang Institute pig education materials.
As can be seen from the figure, in pig breeding, although the proportion of feed cost and piglet cost is smaller than that of large-scale enterprise breeding, the reason may be that for first-class breeding, the formula of feed and the selection of piglets are not as strict as large-scale breeding enterprises. However, it still accounts for about 60% of the total cost. In enterprise farming, the cost of feed accounts for 60% of the total breeding cost. In the feed, the amount of soybean meal and corn, which provides high-quality protein, accounts for 60%-65%. Therefore, we believe that the volatility of soybean meal and corn has the potential to lead to volatility in hogs.
Soybean meal ** basic knowledge Soybean meal ** margin calculation and the impact of Russian pig imports is also the import of pork, China's pork imports in recent years are shown in the figure below:
Data** Data integration.
We can see that if it is really as predicted by the Russian side, 15-200,000 tons of pork will be imported from us every year, which will be a non-negligible import volume in recent years, which may have a certain impact on the quality of live pigs.
Fourth, the pig ** margin calculation
Margin calculations are based on a general formula, since the trading units are fixed, the client only needs to know the proportion of the margin and the unit ** when opening (closing) the position to calculate the amount of margin to be paid. The formula is shown in the figure below:
Unit** Trading unit Number of lots opened (closed) Margin ratio
Example: Suppose the customer opens 1 lot of hog ** contract on February 1, 2023 (taking the main contract LH2403 as an example), the unit ** is 13915 yuan, the trading unit is 16 tons, and the margin ratio is assumed to be 13%, then the margin that the customer needs to pay to open 1 lot of LH2405 is:
13915 yuan ton 16 tons 1 lot 13% = 28943$2.
References
1] *Introduction to trading varieties - hogs 2021 08 18
2] Pig ** investment education materials Dalian Commodity Exchange.
3] Pork from 21 countries will flood the Chinese market! Or close to 20 million pigs! Will pig prices** encounter "roadblocks" in 2024? Southern Rural Daily 2024 01 25
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China Securities Construction Investment**GuangzhouBranchesTips: The data information in this article is an example of the relevant varieties as of the time of publication of the article, and is for reference only, and the actual charging standard is subject to the regulations of the company. The content of this article does not constitute any recommendation or trading advice to traders, traders are advised to fully understand the trading risks and evaluate their own risk tolerance before participating cautiously. The futures market is riskyEnter the marketCaution is required
The content of this article is only the introduction and sharing of trading-related knowledge, and does not constitute any recommendation and trading advice to traders. The futures market is riskyEnter the marketCaution is required