Muyuan Foods (SZ:002714) Sou Hu Cai Jing·2025-08-10 00:33Core Viewpoint - The Chinese government is implementing comprehensive regulation of pig production capacity to prevent significant fluctuations in production and prices, aiming to reduce the breeding sow population by approximately 1 million heads to stabilize the market [1][8][19]. Industry Overview - China's pork production and consumption account for about 60% of total meat consumption, with the current pig production capacity being temporarily high [1]. - As of the end of June, the national pig inventory was 424 million heads, an increase of 2.2%, with the breeding sow inventory at 40.43 million heads, which is 103.7% of the normal level [1]. Price Trends - The price of pork has dropped to 14.53 yuan per kilogram in the first week of August, a year-on-year decrease of 28.1% [6]. Production Adjustments - The Ministry of Agriculture and Rural Affairs has indicated that if timely adjustments are not made, there could be losses in pig farming, especially after the Spring Festival next year [3]. - The inventory of pigs over 5 months old and the number of newborn piglets in the first half of the year are at historical highs, suggesting an increase in pig slaughter in the second half of the year [4]. Capacity Control Measures - The government plans to maintain the total breeding sow population at around 39.5 million heads, with a need to reduce production capacity by about 1 million heads [8]. - Leading pig farming enterprises are encouraged to take the lead in capacity regulation, rationally eliminating low-quality and inefficient breeding sows, and controlling the weight of pigs at slaughter [10][18]. Industry Dynamics - The pig farming industry is currently in its sixth cycle, with ongoing risks of significant production and price fluctuations due to increased production efficiency and slowing pork consumption growth [6]. - Large enterprises account for over 30% of the total pig output, and many have begun to reduce production capacity to avoid future price volatility [11]. Strategic Initiatives - Companies like Muyuan have reduced their breeding sow inventory from 3.621 million heads to 3.3 million heads, effectively decreasing supply by 9 million heads [18]. - Measures such as reducing the weight of pigs before sale and stopping sales to secondary fattening customers are being implemented to stabilize the market [13][16]. Conclusion - The comprehensive regulation of pig production capacity is crucial for maintaining reasonable production levels, ensuring stable pork supply and prices, and promoting the healthy and high-quality development of the pig industry [19].