WENS FOODSTUFF GROUP CO.(SZ:300498) Xin Lang Cai Jing·2026-02-09 23:40Core Viewpoint - The recent decline in near-month contracts is attributed to weakening spot prices, with a notable trend of backwardation in the market [3][19]. Group 1: Market Trends - The spot price of live pigs initially rose to 13.30 yuan/kg in January due to holiday stocking and adverse weather, but has since come under pressure as supply increases ahead of the Spring Festival [3][19]. - As the Spring Festival approaches, pig farming enterprises are increasing their market supply to mitigate holiday risks, leading to a rise in supply pressure [3][19]. - The average weight of pigs being sold is currently high, and the reduction in weight before the holiday is less than expected, exceeding the capacity to meet holiday demand [3][19]. Group 2: Demand and Inventory - The demand for frozen products remains relatively stable, with a decline in utilization rates across various regions; northern markets have seen a decrease of around 10%, while southern markets show a varied decline between 2-11% [3][19]. - Frozen product inventories are continuously decreasing, although overall levels are higher than at the end of the previous year [3][19]. Group 3: Supply Outlook - The supply of newborn piglets is expected to peak around May 2026, with a continuous improvement in supply anticipated in Q3 2026, indicating a strong backwardation pricing trend for the year [4][20]. - The effects of capacity reduction are expected to gradually manifest in the second half of 2026, with expectations for spot prices to recover around May [4][20]. Group 4: Operational Strategies - The high basis of near-month contract 2603 continues, with the futures market showing a persistent downward trend, indicating a significant divergence between futures and spot prices [5][21]. - There is a need to monitor the risk of a significant decline in spot prices after the holiday, while short-term backwardation strategies are supported by fundamentals [5][21]. - Attention should be given to the reduction of breeding sows and potential low-position buying opportunities in the far-month contracts 2609 and 2611 as the market stabilizes [5][21].