“Family pig raising is the main trend of pig industry development?” “Company ten farmers” are in the pit farmers?
The wholesale price of Baitiao pig (fat) in Beijing Xinfadi Market is 5.5 yuan/kg, while in the same period of 2017, the price of white pigs is close to 10 yuan.
According to the agency's estimates, pork prices in 2017 dragged the CPI to more than 0.2%. In 2018, the price of pork is still going down. In late March, the average price of lean pigs in the country fell to the lowest point since 2010. Although the weak rebound began in the next few days, according to the judgment of many experts, the price of pork this year may not be significantly warmer.
Pork prices have a strong positive correlation with CPI, which was once called the “China Pork Index”, although this is due to the special period of “flying pigs” and inflation, but the “pig cycle” and the macroeconomic situation. The high degree of anastomosis makes pork prices an important reference in the process of economists predicting CPI and future monetary policy.
Bian Quanshui, chief macro analyst of Guojin Securities, said in an interview with the Economic Observer that CPI and monetary policy can be predicted from pork prices. Historically, it has been more effective to judge the CPI trend by observing the “pig cycle”, but this indicator has somewhat failed in the past year. Because the price of pork is at a low point, the volatility has dropped, and now the price of pork is used to predict the CPI, and its significance has declined.
The “significant decline” mentioned by Bianquan Water comes from the constant adjustment of the time boundary of China’s “pig cycle”. The pig cycle in the usual sense is counted from 2003. So far, China has experienced three complete pig cycles. The difference is that the three cycles are three years, four years, five years, and the fourth cycle from March 2015 to the present, just shifting from profit point. Loss point. According to historical laws, this pig price cannot rise sharply in a short period of time. Although pork prices occupy an important position in the CPI statistical weight, the weak price has made it unable to become a driving force for supporting CPI.
Hu Glacier, an associate researcher at the Institute of Rural Development of the Chinese Academy of Social Sciences, believes that the biggest drop in this round of pig prices is that the aquaculture industry or the pig breeding industry is in a big leap forward in the process of scale. The combination of government encouragement, capital entry, and environmental policy adjustments has made this round of pork prices structurally declining, which has already affected the price of pork.
A brokerage analyst told the Economic Observer that if the pig price continues to fall in 2018, it will still become a drag on the CPI. If the average price in 2017 is zero year-on-year, the impact on CPI will be 0.2 to 0.3. Percentage points.
The analyst believes that centralized production has determined that the "pig cycle" is longer, and the amplitude of fluctuations in pig prices has narrowed and is biased toward stability. Therefore, the price of this round of pigs will not fall sharply or fluctuate, which means that inflation will not rise sharply due to soaring pig prices.
Zhang Ming, chief economist of Ping An Securities and a researcher at the Institute of World Economics and Politics of the Chinese Academy of Social Sciences, told the Economic Observer that it should be said that pork prices may be stable in the coming period. Pork prices have basically been normalized this year. From this perspective, pork prices this year are still not the main driving force behind the ups and downs of CPI. This year's CPI may be moderately up. The main drivers may include the price of domestic service products, including factors such as PPI transmission to CPI.
Pork prices are approaching the price axis
The demand for pork after the Spring Festival is in a downturn every year, and the psychology of “every day will rise” will make the farmers value the coming Ching Ming Festival. But the endogenous motivation of this round of price decline seems to be going back to more factors.
Hu Glacier believes that short-term market supply and demand is only one aspect of reflecting prices. In this round of aquaculture expansion, there must be a round of reshuffle. Beginning at the end of 2016, the destocking of corn, the proposal of large-scale farming, environmental protection policies, and food safety constraints will jointly drive market expansion and planning of farms. It also includes the administrative emptying of the restricted and abandoned areas after the entire pig breeding has been transferred to the northeast. This round of price changes, in addition to the cyclical cycle of oversupply, the core factor is that in the process of large-scale expansion, the big leap of investment brings about a rapid expansion of production capacity. In recent years, especially in the past 12 months, the overall capacity expansion of pork has been faster than the growth of pork demand. “Another important factor is that China’s pork consumption has been growing in recent years, but the growth rate has begun to slow down, as China’s meat consumption structure has gradually shifted from red meat consumption to red meat, white meat consumption and aquatic product consumption. Diversified protein intake. In the past, protein consumption that relied entirely on pork has basically come to an end, but pork consumption will still grow, but growth will be constrained.” Hu Glacier told Economic Observer that the more dispersed the food source, the market for a single product Relying on lowering, this will have a strong constraint on the price increase of a single product.
Feng Yonghui, chief analyst of Sogou.com, believes that pork prices are a kind of mapping, and the judgment of the pig cycle depends on production capacity.
In Feng Yonghui's view, the reason why the pig cycle began in 2003 is mainly because after China's accession to the WTO, demand transfer and supply adjustment and production structure are more sensitive. In the breakdown, the first pig cycle is from 2003 to 2006, only three years; the second pig cycle is from 2006 to 2010, extended to four years; the third cycle is from 2010 By 2015, it will last for five years; now the fourth round of pig cycle starts from March 2015, and just ended the profit and entered the loss. That is to say, after the end of the loss period, this round of pig cycle will end.
Feng Yonghui believes that the third round of pig cycle is to lose the excess capacity after three years of losses, and then complete the round pig cycle. The current fourth round of pig cycle profit period is nearly three years. Conservatively, if the length of the previous cycle is used, the current pig cycle may be as long as six years.
This also makes the fluctuation of pork prices weaker. If we look back at the trend of pork price changes in 2017, we can see that in addition to the stimulus demand for the Spring Festival at the beginning of the year, it is generally a trend of “slow down”, a small rebound, a downward shock, and a shock after the seasonal stimulus. According to the agency's calculations, the final result is that pork prices in the whole year of 2017 will fall by about 8%.
In late March of this year, the average price of lean meat pigs in the country has created the lowest price in June 2010 in nearly 8 years. Although there was a slight rebound later, only the northeast and north China regions rebounded, and the overall fluctuations in the south and southwest regions were small.
Hu Glacier believes that this round of pork prices is a structural decline that has affected the price of pork. As the central axis of production costs changes, if the past fluctuations in pork prices are around $10, future fluctuations may revolve around $8.
This means that when the market asks "what is the second brother", it is no longer possible to pin the hope on the strong demand brought by the festival. Because the price of pigs is determined by supply and demand, supply plays a leading role, and demand plays a secondary role. Feng Yonghui believes that the relationship between pork prices and CPI, or the macro economy, is more of an input type. That is to say, the money supply of the whole society is too large, and the growth rate of social and economic development is very obvious. The consumption of pork by residents and the demand for pork by the people may have relatively room for growth, which will drive up the price of pork.
Feng Yonghui said that because the hog market is more of a free market, the response to the macro economy is more sensitive. From this perspective, pork prices are partly a reflection of macroeconomic and CPI changes. It is not because pork prices have pushed up the CPI, but the economy of the whole society is improving, domestic consumption is better, and then reflected in pork prices.
However, from a statistical point of view, changes in pork prices will lead to changes in CPI, and the impact of changes in CPI on pork prices is not significant.
CPI weight change
At present, the CPI statistics of the National Bureau of Statistics constitute a total of eight categories, namely food and tobacco, clothing, daily necessities, health care, transportation and communication, entertainment education, housing, and other supplies.
In this round of CPI statistical structure, food weights have been reduced. In the weighting of the traffic that began in 2011, the proportion of foods can reach 30%. Studies have suggested that pork may have a weight of up to 10% in all CPI commodities, although officials at the National Bureau of Statistics said the figure was only 3%. Even so, pork as a single commodity, its price has a very large impact on the overall CPI.
In the case of the most obvious fluctuations in pork prices, pork prices soared in 2007. In 2008, pork prices rose first and then fell. In 2009, they peaked in the valley, and soared in 2010-2011. In 2012, they fell again. It has continued to decline in the second half of 2014. In the past few years, the trend of CPI has shown a very consistent synchronization. So much so that the CPI produced a name - "China Pork Index."
In an interview with the Economic Observer, Zhang Ming said that from the past, China's CPI growth rate is indeed driven by the growth rate of pork. It can also be seen that pork price volatility is always greater than food, food is always greater than CPI, and many times the price The volatility ahead of the CPI. Pork prices have indeed fallen faster since the beginning of the year, which is actually a very important reason why CPI has not been up. In fact, in addition to food prices, there are other factors driving CPI, such as rent, medical service prices. These factors are also the main driving force behind the CPI going up in the past year or so.
The fact that it is easily overlooked is that the composition and weight of statistical CPI are constantly changing. In 2016, the National Bureau of Statistics lowered the weight of food prices and raised the weight of service prices. This was due to the acceleration of consumption upgrades and the impact of rising costs of labor and other factors. The promotion of food prices to CPI is gradually increasing.
However, the impact of pork prices on CPI is still not to be underestimated. A brokerage analyst believes that "pork accounts for the weight of the entire CPI component is not very high. But even if the weight of 1%, if the year-on-year price fluctuations of 10% or more, will be clearly reflected in the change of CPI ""
In the view of industry analysts, the real weakening of the short-term impact of pork prices may be the structural changes in the Chinese aquaculture industry or the pig breeding industry. The increase in live pigs in this large-scale farm is far greater than the stock of the original free-range households. And the production capacity of pigs from the "Southern Pig Northward Movement" to the Northeast has basically been formed, and it is in the climbing stage. On the contrary, the previous pig cycle was affected by the macro economy. In particular, the macroeconomics in 2008 and 2009 had a particularly large impact on pork prices, as the expansionary monetary policy brought about a rise in the central price of the entire price.
Hu Glacier, an associate researcher at the Institute of Rural Development of the Chinese Academy of Social Sciences, believes that the fall in pork prices in this round is not the same as the previous stage. The price of pork in the past is the exogenous performance of money, and the inflation performance brought by money. This round is mainly the impact of the industry itself, and there are few monetary factors. The correct logic should be after the price compensation and separation, after the upstream feed cost and international standards, the aquaculture industry is profitable, coupled with the government's transformation of animal husbandry development ideas, including environmental assessment ideas, the final result is to expand the scale, promote technological progress, Lowering production costs and then superimposing demand factors led to a fall in pork prices. The fall in pig prices was finally reflected in the CPI, and the effect was to lower the CPI, but the CPI decline at this time was caused by industrial policies, not caused by the macroeconomic downturn.
Bian Quanshui, chief macro analyst of Guojin Securities, told the Economic Observer that the correlation between pork prices and CPI is certainly established, but strictly speaking, it cannot be called causality. The deeper thing may be the change of income or consumption. Fundamentally speaking, pork prices and CPI are partial and total. China is currently at the bottom of a short economic cycle and may move slowly upwards in the future. The economic cycle will drive up the consumption of pork, which will promote pork prices in the future.
Source: Economic Observer