Seven years after graduating, Oda, a “worker”, used the hard-earned money last year to invest in pig raising. I thought I would be able to drive on the fast lane from now on, but who would have thought it was hitting the dark tunnel: At the end of April, Oda waited for the first batch of 500 pigs to be released for slaughter, and the result was a loss of more than 200,000 yuan.
This is the case. In the face of the further decline in pig prices, Oda had to admit in an interview with the “Daily Business News” reporter in June, “It’s okay to get out early.”
The reporter learned from an interview that, even with the lowest cost self-reproduction and self-raising model, there is no way to maintain a breakeven. Muyuan shares (002714, SZ) has achieved a breeding cost of less than 16 yuan/kg, and it cannot hold the national pig slaughter price. Has fallen below 15 yuan/kg.
Pig farmers, including Oda, woke up in the spring and summer of 2021 and realized that even the “strongest pig cycle in history” is still a pig cycle.
The price of pigs will rise more vigorously in the early stage, but will fall more painfully in the later stage. Down to now, the National Development and Reform Commission has issued a three-level warning for excessive hog prices on June 16, and then a second-level warning-the purchase and storage plan will be activated depending on the situation, and the first-level warning-the purchase and storage plan will be activated immediately .
In January this year, my country’s live pig futures were listed on the Dalian Commodity Exchange for the first time. In just a few months, live hog futures have also set new lows one after another. As of June 18, the price of the main 2109 contract of live hog futures has fallen from a historical high of 30,680 yuan/ton to less than 18,000 yuan/ton.
The plunge in pork stocks is even more pronounced. As of June 18, the Flush Pork Concept Stock Index has fallen by more than 34% from the five-year high in September 2020. Among them, the leading Muyuan shares had reached 131 yuan per share in February this year, and has now fallen to 57.15 yuan per share, a decline of more than 56%. Zhengbang Technology (002157, SZ)’s current stock price is 11.62 yuan/share, and it reached 26.68 yuan/share in August 2020, a drop of more than 56%.
A number of listed companies disclosed that they plan to use the futures market to assist their operations. However, for live pig futures, most companies are still in the stage of “crossing the river by feeling the stones”.
The pig cycle is repeated, how can the industry get out of this infinite loop?
The dream of raising pigs to become rich in 2020: 500 pigs can earn millions
Regardless of whether it is self-raising or purchasing piglets, based on the market in 2020, it is not an exaggeration to say that raising pigs is a “really profitable” business.
Looking back at history, in this round of the pig cycle, the highest price of pigs appeared in February last year. At that time, the national average price of pigs for slaughter reached 38.3 yuan/kg, and the price of pigs for slaughter in some areas exceeded 45 yuan/kg. In the next three months, the price of pigs dropped briefly, but the lowest level only dropped to about 30 yuan/kg.
Starting from the second half of last year, the pig price started a new round of rising market. By August, the national average price of live pigs rose to more than 38 yuan/kg, and returned to the peak. There is a trend of “callback is for better rise”. .
Xiaotian is a post-90s pig raiser in Longnan, Gansu. His pig farm chose to join the game at this time-the pig farm bought 500 piglets in one fell swoop and prepared to do a big job. “It was almost October last year, when the venue was just built, I bought a batch at a cost of about 1,800 to 2,000 yuan (per head).” Oda said.
On the other hand, a little earlier than Xiaotian, Lao Chen from Guangdong returned to his hometown in August last year. At that time, the pig house that had been idle for many years had been “coveted” by the villagers for a long time, and he also made up his mind to raise pigs. “Several people called to ask whether to rent or not. I said that renting is better than raising it by yourself. It’s very simple, rearranging water lines, drinking fountains, circuits, etc., and looking for a big company to buy 100 piglets—(but) in the end. Only 80 pigs were obtained.” Compared with Xiao Tian, Lao Chen’s piglet cost is slightly lower, about 1,500 yuan/head.
What does the “national average price of 38 yuan/kg” mean, and why can it attract farmers such as Xiaotian and Lao Chen to enter the market one after another? It may be difficult for people outside the industry to understand, but as long as the economic accounts are calculated, it is easy to understand.
At present, the weight of a standard commodity pig is about 130 kilograms at the time of slaughter. If the slaughter price is 38 yuan/kg, one can be sold for 4940 yuan. What is the total cost of this pig (including feed vaccines, manual management, equipment depreciation, etc.)? “Pig grass” Muyuan shares disclosed that its complete cost of commercial pigs last year was more than 15 yuan per kilogram. If calculated at 15.5 yuan, the full cost of a standard pig is 2015 yuan, and a profit can reach 2925 yuan. A company that breeds and raises piglets can earn a profit of 100,000 yuan by raising 35 pigs.
Unlike the self-raising and self-raising Muyuan shares, how much money can farmers who raise piglets purchased from outside such as Xiaotian and Lao Chen make?
Muyuan shares disclosed that the cost of each piglet last year was between 350 yuan and 400 yuan. Taking Lao Chen as an example, the cost of his piglets is 1150 yuan higher than that of self-breeding and self-raising. The full cost of his standard pig is 3165 yuan/head. It is still calculated at the slaughter price of 4940 yuan, which can make Lao Chen earn 1775 yuan per head. , 80 pigs can make a profit of 142,000 yuan.
Oda’s plan is to fatten standard pigs into large pigs of about 175 kg and then release them to slaughter, which will increase the weight of standard pigs by 45 kg. It is still calculated at the full cost of 15.5 yuan/kg. The breeding cost will increase by about 700 yuan, which is the cost of a large pig. It is about 2715 yuan, plus the piglet cost difference of 1400 yuan to 1650 yuan, the total cost is about 4100 yuan to 4300 yuan, and the median value is about 4200 yuan. If the slaughter price remains at 38 yuan/kg, a 175 kg pig can be sold at a high price of 6,650 yuan, with a profit of 2,450 yuan per pig. Based on this calculation, 500 pigs will bring millions of dollars in profit to Oda’s pig farm.
Faced with such huge profits, it is no wonder that pig farmers followed one after another.
Image source: Visual China
“Pigs” in 2021 are not going well: pigs that are too big are rejected
However, the world is unpredictable. At the time of the slaughter season, Lao Chen’s pig farm failed to bring the expected benefits, and Oda’s dream of making a profit of one million yuan has also become a reality with a loss of more than 200,000 yuan.
At the end of February this year, the price of Guangdong live pigs for slaughter had slowly dropped to about 31 yuan/kg. Old Chen emptied the pigs on the slaughter. “One head is 4,000 yuan. We didn’t raise it in the middle, and only 76 slaughtered. After counting, we made 6 It’s less than 10,000 yuan. It’s a little better than a part-time job.” Lao Chen introduced that after the first batch was released, he bought another batch of piglets. This time he got 100 piglets as he wished, but unexpectedly, the price of pigs kept falling. There is no market for half a year, and it must be a loss at the current price (listed).”
At the end of April this year, Oda finally raised the 500 piglets put in half a year ago into large pigs with an average weight of about 175 kg. However, the market has already changed at this time. The price of pigs has fallen straight from the peak of 38 yuan/kg, even more than Last year’s lowest price of 30 yuan/kg was less than one-half, only 21.6 yuan/kg.
At the price of 21.6 yuan/kg, the selling price of each pig is about 3780 yuan. Based on the total cost of 4200 yuan, each pig will lose 420 yuan. “The price of pigs has fallen so badly that they have to be sold. Our 500 pigs lost more than 200,000 (yuan) and less than 300,000 (yuan). If we sell it now, it is estimated that we will lose more than half.”
In the early mornings when the slaughter was arranged, Oda drove the carefully raised pigs from the farm into the passage in batches. These fat guys lined up, buried their heads, and shook their bodies all the way forward. Oda, who followed behind, recorded the scene with his mobile phone, but was speechless.
Entering May, the price of pigs is falling further. However, there is still room for profit in the self-reproduction and self-support breeding model.
On May 16, the national average price of slaughter pigs was 18.98 yuan/kg. Fujian farmer Azu (a pseudonym) slaughtered 80 pigs with an average weight of 140 kg. The slaughter price was 18.6 yuan/kg, slightly lower than the national average price. But Azu revealed to reporters that under the self-reproduction model, it will not lose money to sell at this price. “At my own cost, as long as the pig price is not less than 8 yuan/jin, I will still make a profit.” Azu said.