Facts have proved that when the tuyere comes, pigs can really fly!

Over the past two months, due to the influence of classical swine fever, a new round of pig cycle in China has come ahead of schedule, and the related pork concept stocks have been speculated into the sky ahead of time under the crazy promotion of speculation funds.

Even the problem stocks with a huge loss in goodwill have been fired to double or even nearly double the market, which is startling!

The US market at the first end of the earth is also being affected by the Chinese pork cycle, and US pork prices are showing signs of rising as trade talks advance. In particular, the pork futures price in the United States, since March, the pork futures in the United States have begun to rise sharply. up to now, the main contract of American lean pigs in recent months has been rapidly fried from 75 cents / pound to 97 cents / lb. it has soared by more than 30% in less than a month, and the contract price is about to break through to 100 cents / pound (about 7.4 / jin). The price of pork futures in August and September even broke through the 100-cent mark, which is the highest price in the recent history of pork futures in the United States.

It's not over yet.According to the latest news from Bloomberg, as one of the conditions of intention reached in the trade talks, China plans to continue to increase its imports of US pork after purchasing 23800 tons of pork at the beginning of this month, and the quantity is likely to be not small.

According to the USDA, China will produce 54.8 million tons of pork in 2018, about five times that of the United States. If China buys 1 per cent of its pork production, or 548000 tonnes, from the US, the impact on US pork production is 5 per cent, which will significantly affect US pig prices.

This means that U. S. pork futures prices are likely to continue to soar in line with China's pork import demand.

Pork prices in China may continue to rise.

This year's soaring pork prices are mainly affected by the spread of classical swine fever in Africa in August last year. The willingness of breeding plants to increase production capacity decreased significantly at one time, resulting in a sharp decline in China's pig production capacity. According to the January sow stock data released by the Ministry of Agriculture and villages, sows in January dropped 3.56% month-on-month, 14.75% lower than the same period last year. According to the world granary data and market information, the national pig production capacity has even dropped by 17.39%.

In the case of reduced production capacity, the number of live pigs decreased significantly in 2019 compared with the same period last year, and pig prices for the whole year began to rise rapidly in recent months, and the upward trend continues.

From the perspective of pig supply, pig production capacity has fallen off a cliff since the fourth quarter of last year, mainly affecting the number of live pigs in the third to fourth quarters of this year. According to the current sow stock data, the number of live pigs in the third and fourth quarters is expected to drop by more than 15% compared with the same period last year, and the number of pigs released in the first half of 2016 fell by 5.9% in the first half of 2016, so as the supply of pigs fell in the second half of this year, pig prices may continue to rise, or even hit record highs.

On the other hand, considering that the production capacity of fenced sows will not be released until 13 months later, it is expected that sows will begin to increase after considerable profits in pig farming in May-June this year, and pig prices are expected to be high until at least June 2020.

How much impact does Chinese pork demand have on pig prices in the United States?

According to the analysis of CITIC Futures Research Department, since the sow stock at the beginning of 2019 corresponds to the end of 2019, the entire 2019 pig supply can be determined by the number of sows stored from March 2018 to early 2019. Therefore, under the roughly stable litter size (around 10.50 in recent years), it can be estimated that the number of live pigs in 2019 will increase by 1.79% compared with 2018. According to USDA forecasts, 137.81 million pigs were fenced in the US in 2019, up 2.87 per cent from 2018. As a result, combined with USDA data, the US pig supply is expected to grow by about 2 per cent for the whole of 2019.

In terms of the distribution of China's pork imports, the United States is not China's largest source of pork imports, and the United States is not the largest source of China's pork imports. According to 2017 data, the United States imports 10% of all pork imports. Spain is the largest importer, accounting for 15%, followed by Germany, accounting for 13%.

From the perspective of US pork exports, US pork exports as a whole showed an upward trend, but the rate of increase slowed down in recent years. The proportion of total u. S. pork exports to total pork production has been relatively stable in recent years, at about 20%.

From the perspective of exporting countries, China is not a major exporter of the United States. In 2017, US pork exports totaled 2.55 million tons, of which 165000 tons were exported to China, accounting for only 6.47 percent, with Mexico and Japan accounting for 32.12 percent and 21.82 percent, respectively. Judging from the current amount of pork imported from China to the United States, there is some room for increase.

Therefore, taking into account China's import demand and the supply of US exports, under the optimistic situation of improving Sino-US trade, it is estimated that the annual import of US pork production will be increased by about 300000 tons. The growth rate accounts for a small part of total domestic consumption, accounting for about 2.5% of US pork production.

From the perspective of US pork exports, US pork exports as a whole showed an upward trend, but the rate of increase slowed down in recent years. The proportion of total u. S. pork exports to total pork production has been relatively stable in recent years, at about 20%. From the perspective of exporting countries, China is not a major exporter of the United States. In 2017, US pork exports totaled 2.55 million tons, of which 165000 tons were exported to China, accounting for only 6.47 percent, with Mexico and Japan accounting for 32.12 percent and 21.82 percent, respectively.

Judging from the current amount of pork imported from China to the United States, there is some room for increase. Generally speaking, the proportion of pork imports to the total domestic pork consumption is relatively low, but it shows an upward trend as a whole. For Sino-US pork trade, the United States is not China's largest source of pork imports, nor is China the largest pork exporter of the United States. The proportion of pork exported by the United States to China is only 6.47% of the total pork exports, which has some room for increase.

According to the analysis of Citic Futures Research Department, under the optimistic situation of improving Sino-US trade, it is estimated that US pork exports account for 25 per cent of output, while exports to China account for 15 per cent, with annual exports of about 450000 tons of pork to China. It is estimated that the import volume will increase by 285000 tons over 2017. Compared with the domestic pork consumption volume of 54.81 million tons, this figure is smaller than the total domestic pork consumption, so it is difficult to significantly affect the domestic pig and pork market.

Despite the increase in US production, US pork prices will rise as a result of higher demand. From the comparison between the price difference of lean pig futures and the historical seasonal characteristics of US pig prices, it can be seen that China's increase in pork imports will affect US pig prices by at least 15%, making US pig prices significantly higher in the second half of the year than in the first half of the year, flat or slightly higher than in the same period last year.