Muyuan Foods (SZ:002714) Qi Huo Ri Bao·2025-10-20 01:40Core Viewpoint - The recent decline in live pig prices indicates an oversupply in the market, driven by increased production capacity and insufficient reduction of breeding sows, making it difficult for prices to recover even with seasonal demand increases [2][3]. Price Trends - Since October, live pig prices have dropped significantly, with the average price falling to 12.90 yuan/kg, a decrease of 2.8% week-on-week and 29.5% year-on-year [1]. - Futures prices have also declined, with near-month contracts approaching 11,000 yuan/ton and a drop of over 9% since October [1]. Supply and Demand Dynamics - Analysts indicate that the supply of live pigs remains high, with significant outflow volumes leading to losses for enterprises, which is typical in cyclical industries [2]. - The market is currently experiencing a dual loss situation for both piglets and fattening pigs, with an increase in the sentiment to cull breeding sows, although the pace of capacity reduction is still below expectations [3][4]. Industry Response and Capacity Adjustment - The government has initiated measures to reduce breeding sow numbers, aiming for a decrease of 1 million by the end of the year, but the actual reduction has been limited, with many enterprises only making minor adjustments [4]. - Major companies like Muyuan Foods have responded positively to capacity reduction calls, but smaller firms have not shown significant reductions, leading to an overall slower pace of capacity adjustment in the industry [4]. Future Outlook - If the reduction in breeding sow capacity accelerates, it could lead to a decrease in fattening pig supply by August 2026, but the market may face oversupply until then [5]. - The price of live pigs is expected to fluctuate based on the rhythm of market supply and demand, with potential price points unlikely to exceed 14 yuan/kg or drop below 10 yuan/kg without panic selling [5].