At present, although the price of eggs is close to the historical bottom, with the sharp drop in the prices of corn and soybean meal, the cost of breeding is also declining. At the same time, the futures price is still at a premium relative to the spot price. In addition, in the case of weak demand in the later period, we believe that the market outlook can rebound and short appropriately.
Loose supply, weak rebound in egg prices
Generally speaking, the peak laying period of laying hens can last for about 5 months. When the laying rate of laying hens drops below 70%, farmers will begin to consider phasing out laying hens according to market conditions.
According to the data of Prospective Industry Research Institute, the supply of laying hens in the short-term market will still be sufficient; If there is no large-scale elimination of the number of laying hens in the later period, the number of laying hens will increase steadily and continuously, and the supply of eggs will continue to be abundant.
At present, the chicken age structure is still young and the number of old chickens is small. It is expected that the elimination of laying hens will be limited in the short term when the feed price falls and the breeding is still profitable, which also provides the possibility for the egg price to fall further.
As the macro-economy continues to slow down, residents' consumption is obviously affected. This year's consumption of two-day eggs is also significantly lower than in previous years, and the market is even less optimistic about the consumption of eggs after the holiday.
Zhihua data monitoring shows that the average price of eggs in all provinces in China has been around 3.4 yuan/kg recently, with a slight increase. However, the demand performance is flat, and it is expected that the spot price will not improve before the Spring Festival. So although the price has rebounded recently, the extent of the rebound will be limited.
Although the egg price has stabilized recently, there is no big favorable factor in the market to stimulate egg consumption, and the egg price will continue to be weak.
The price of raw materials has dropped, and the cost has dropped.
The cost of laying hens mainly includes feed cost, chick cost and disease prevention cost. In the whole production cost structure, the feed cost accounts for 60%-70%, and the chick cost accounts for 15%-20%. Corn and soybean meal are the main components of energy and protein in the feed for laying hens, accounting for 60%-65% and 20%-25% of the feed cost respectively.
Affected by factors such as increased supply and high inventory, corn prices have been falling since March this year. The price of corn continues to fall, the price of soybean meal is also at a low level, and the packaging cost has dropped to a certain extent, so the cost of laying hens is constantly moving down.
Breeding profit reappears loss
With the sharp drop in the price of eggs in the past two months, the profit of laying hens has also changed from the profit state in September to the loss state, which is 10. In the later stage, the upside of the current price of eggs is limited, and the possibility of a significant increase in breeding profits is weak.
At present, the number of live pigs in China has rebounded, which has put some pressure on pork prices. However, the number of fertile sows continues to decline, which limits the supply of long-term piglets and pigs. Therefore, in the long run, the price of live pigs may still be slightly tight. At present, the weakening demand for live pigs has also dragged down the demand for eggs.
Futures premium spot
We have counted the locations of four benchmark egg delivery warehouses (Dalian, Liaoning, Dezhou, Shandong, Puyang, Henan and Hanbei).
Dan) Average egg market price, and follow the basis trend of 1 and May contract. The data shows that since 10, the spot price of eggs has been falling, and the basis has changed from positive to negative, resulting in the existence of futures prices relative to spot prices.
With higher water. Up to now, the basis differences of JD 160 1 contract and JD 1605 contract are -404 and-177, respectively, and the higher premium also limits the rising space of futures price. Once the spot price continues to be weak,
It will also drag down the market's expectations for egg futures prices. At that time, as the delivery month approaches, the futures price may also be close to the spot price.
We believe that it is more likely that the egg price will continue to decline weakly in the case of continued sluggish market demand in the later period.