The fluctuation of pig prices and the identification of major drivers in China

by Junguo Hua, Jing Ding, Yufan Chen, Lulu Kang, Haiying Zhang, Junhua Zhang

In recent years, the domestic live pig price has risen and fallen rapidly and fluctuated frequently, which has greatly impacted the live pig industry. The level of price volatility in the pig market has served as a significant indication of the progress of the agricultural sector. Identifying the dominant factors affecting the fluctuation of pig prices has become more important. Based on the monthly data of the pig industry from February 2009 to December 2022, this paper constructs an index system of influencing factors of pig price from four aspects: uncertain impact, supply factors, demand factors, and macro-environment factors. By using the transfer model of the Markov regime (MS-VAR), we obtained the probability plot of zone transition for pig price volatility, the impulse response effect diagram of factors affecting pig price, and the cumulated impulse response effect diagram of factors affecting pig price, and analyze the reasons for the ups and downs of pig price according to the above results. The findings indicate prominent features of zone transition in the price fluctuation of China’s pig market. From 2017 to 2022, the domestic pig price frequently switches between rising and falling zones, and the "falling pig price stage" and "rising pig price stage" in the non-stationary state last for a relatively short and discontinuous period. There is little probability that the price of live pigs will directly change from rising to falling, and there will be a smooth buffer stage in the price rise and fall process. Among the factors that affect the fluctuation of live pig prices, the dominant factor of frequent and large fluctuation of pig prices is the pig epidemic situation in external factors. Among the internal influencing factors, the changes in farming costs have the greatest significant influence on the fluctuation of pig prices. These results provide a decision-making reference for legislators to carry out epidemic risk prevention and control better, stabilize the market pig price, and provide empirical evidence for market participants to accurately avoid price risks through multiple channels and ways and ensure stable profitability.