Today's national average price of live pigs is 18.46 yuan/kg, an increase of 4.12 yuan/kg compared to the same period 23 years ago, with an increase of 28.73%. The regions with the largest increase are Shanghai, Jiangsu, Zhejiang, and other areas. In the future, with the arrival of festivals and the peak season of autumn and winter, the price of live pigs is expected to continue to rise.

Why has the price of pigs soared?

The most important reason is that the number of sows in China is declining month by month, and the capacity reduction has basically been achieved. The supply of live pigs has basically reached a balance. Secondly, as the domestic economy recovers, consumers' purchasing power has rebounded, and there are signs of increased demand for pork. Thirdly, some pig enterprises are fattening pigs for a second time, leading to a decrease in the current market supply of live pigs.

Overall, it is highly likely that the performance of the pig farming industry this year will be significantly better than last year. Investing in livestock index funds this year or continuing to hold livestock sector stocks is at least a correct choice from the current perspective. This is because the current livestock index is still relatively low, and the performance of the livestock industry is expected to continue to recover in the future. Now is a rare opportunity to increase investment in livestock index funds.

Advertisement

In the pig industry chain, I am more optimistic about the pig slaughtering industry, which is a blue ocean industry. What is a blue ocean industry? It is an industry with less competition and not very intense. The slaughtering industry abroad has entered a stage of oligopoly, similar to the home appliance industry in our country. The market share of many slaughtering giants in various countries has reached more than 70%.

A limited number of two or three slaughtering enterprises occupy most of the market in the entire slaughtering industry, which is a manifestation of the industry's development to the red ocean stage. The blue ocean stage is when there are no real giants in the industry, and the industry is in a stage of contention among many competitors. This is the case in our country's home furnishing industry, home textile industry, slaughtering industry, and so on.

In 2023, the slaughter volume of the six largest pig slaughtering enterprises in China was 42.39 million heads, accounting for only 6.41% of the slaughter volume of designated slaughter enterprises nationwide. The largest slaughtering enterprise has a market share of only 2%! This indicates that a large number of slaughtering enterprises are small companies with low slaughter efficiency and low business profits.

This also indicates that the development prospects of China's slaughtering industry are broad, and there is a lot of expansion space for enterprises in the industry. In the future, there will inevitably be outstanding slaughtering enterprises that can take the opportunity to expand their scale and achieve the goal of becoming the king of the slaughtering industry through mechanization and intelligence.

Who will become the king of China's slaughtering industry in the future? At present, Muyuan Shares is the most likely. In 2023, the utilization rate of Muyuan Shares' annual slaughtering and meat food business capacity increased from 25% in 2022 to 46%, with a slaughter volume of 7.362 million heads.In 2019, Muyuan Shares began to lay out the slaughtering business. In just four years, it achieved a slaughter volume of 7.362 million heads, accounting for about 2.15%, and it has the largest slaughter volume among enterprises above designated size. It has surpassed the traditional leading slaughtering enterprise Shuanghui Development and has become the new leader in the industry.

Muyuan Shares has now become a dual industry giant in pig farming and pig slaughtering. If it continues to develop in the future, it is not impossible to become a giant in the pork processing industry. In this way, it can achieve a one-stop industrial chain of pig breeding, slaughtering, and processing, and maximize profits.

At the very least, Muyuan Shares has already taken the advantage in the pig slaughtering industry. In the future, it is most likely to continue to expand its scale, develop from a 2% market share to a market share of several tens of percent, and become a giant in the slaughtering industry.

Declaration: Any opinions expressed in this article are personal to the author and do not constitute investment advice. The market is at your own risk.