Feed can be reduced by up to 500 yuan/ton! By 2025, as costs continue to decrease, is pig farming profitable?

The continuous decline in feed prices is beneficial for the stability of breeding profits. According to market feedback, several feed companies including Tongwei, Haida, New Hope, and Aohua have recently announced price reductions for livestock and poultry feed. However, it should be noted that with the increase in sow production capacity since the second half of 2024, pig prices are expected to be lower in 2025. Can feed continue to operate at low prices on the basis of increased demand?

Feed prices are declining

Feed prices have dropped again!

Since December, several feed companies have announced a price reduction of 50-100 yuan/ton for pig feed, and recently, several feed companies such as Tongwei, Haida, New Hope, and Aohua have announced a price reduction of 50-100 yuan/ton for livestock and poultry feed, with a maximum price reduction of 500 yuan/ton for aquatic feed.

Moreover, according to the raw material market, the feed market is expected to remain low throughout the end of the year - currently, the mainstream 43% protein soybean meal spot price in the domestic coastal market is around 2860-2880 yuan/ton.

Although many farms need to stock up in advance towards the end of the year, the inventory of soybean meal and soybeans in oil factories is showing a "double increase" trend - as of the 52nd week of 2024, soybean meal inventory has increased to 703200 tons, a month on month increase of 20.7%, while soybean inventory in oil factories has increased to 5.9 million tons, a year-on-year increase of 1.98%. Under the situation of sufficient supply of raw materials, it continues to be beneficial for the price reduction of feed.

It is worth mentioning that pig prices began to rebound in January, while feed prices continued to decline, indicating that breeding profits in January are expected to increase month on month.

According to the National Bureau of Statistics, in December 2024, the national pig to grain ratio was 7.73, an increase of 1.31% month on month, ending three consecutive months of month on month decline; The average profit of pig breeding heads was about 177 yuan, and ultimately, the average profit of pig breeding heads in December was about 177 yuan, a significant decrease compared to November.

According to the Ministry of Agriculture and Rural Affairs, the net profit per pig raised on a large scale in November 2024 was 289 yuan, a decrease of 33.4% compared to the previous month; The net profit per free range pig was 189 yuan, a decrease of 43.2% compared to the previous period.

Behind the significant decline in pig farming profits, the main reason is the sharp decrease in the average price of live pigs. If it were not for the synchronous decline in feed prices, the pig to grain ratio and pig profit value in December are likely to be lower.

Therefore, pig farming enterprises are generally not optimistic about the business situation in 2025 and have set new cost reduction targets. In fact, from the perspective of changes in the national sow production capacity, it is a foregone conclusion that the supply of live pigs will increase by 2025. The key is whether the feed raw materials will continue to remain low?

Feed supply and demand situation in 2025

Looking ahead to 2025, if feed prices rebound at a low level, the pig farming industry will face the dilemma of "difficult cost reduction"; If feed prices drop at a low level, even if the supply of live pigs increases, most people should still be able to achieve overall profitability.

From the perspective of raw material supply and demand, the global corn inventory ratio for 2024/25 is the lowest in 12 years. The US Department of Agriculture predicts that the global corn ending inventory for 2024/25 will be 296.44 million tons, a decrease of nearly 20 million tons year-on-year. Corn exports from Ukraine and Russia will tighten, European corn production will fall to the second lowest level in the past 15 years, and Brazilian corn exports will reach a four-year low. All of these indicate that the global supply and demand situation will be tight in the coming months.

In addition, with the increase in pig production capacity by 2025, the consumption of feed may increase, which may lead to an increase in feed prices.

However, the outlook for global corn production in 2025/26 is optimistic. The US Department of Agriculture predicts that US farmers will reduce and increase their corn planting for the next year, while the EU expects corn production to increase by about 3% in 2025/26. The Ukrainian Ministry of Agriculture has stated that "the corn planting area in Ukraine may increase by 500000 hectares by 2025" The increase in total production is expected to constrain the room for price increases.

From the perspective of soybeans, the international soybean price will drop by 19% in 2024, which is already the second consecutive year of price decline. However, for 2025, countries such as the United States and Ukraine have stated that they will reduce their planting areas, which may provide support for the price of soybean meal.

The good news is that the global inventory is still sufficient. The US Department of Agriculture predicted in its December supply and demand report that the global soybean ending inventory for 2024/25 would be 131.87 million tons, a year-on-year increase of 17.6%. The global soybean inventory to usage ratio is very loose at 22.52%, higher than the previous year's 19.98% and the 10-year average of 19.26%. This is the highest inventory to usage ratio since 2018/19 and the second highest level in 60 years!

Overall, the supply expectations for corn and soybeans in 2025 are relatively stable, with the biggest variables being weather and policies. As long as there are no major emergencies, there is hope that feed prices will continue to remain at a low level.

But no matter what, the fluctuation of raw material prices is uncertain. At first, no one could have imagined that raw material prices would decline so sharply in 2024. Therefore, in order to increase efficiency and reduce costs in pig farming, it is still necessary to focus on cultivating internal skills. At the same time, it is recommended that farmers plan their production capacity reasonably, improve quality first and then increase quantity, so as to ensure the long-term and stable profitability of the pig farming industry.