Summary of the Conference Call on September Pig Production Data Industry Overview - The conference call focuses on the pig farming industry, specifically the production and market dynamics of breeding pigs and piglets in China. Key Points and Arguments 1. **Breeding Pig Expansion Trends** The trend of breeding pig expansion is significant, reaching the highest level since 2022, with a 14% increase compared to January 2014 and an 8% increase compared to January 2023, although it is down 6.6% from the peak in January 2021 [1][2] 2. **Sales and Elimination of Breeding Pigs** In the last three months, external sales of breeding pigs have remained stable, with a year-on-year decline of 20% and a cumulative decline of 9%. The elimination rate increased by 5% month-on-month and approximately 40% year-on-year in September [3][4] 3. **Mother Pig Inventory Changes by Scale** In September, the inventory of mother pigs varied by scale: farms with fewer than 5,000 pigs remained stable with a 0.4% increase; farms with 5,000 to 20,000 pigs saw a 0.9% decrease; and large enterprises with over 20,000 pigs experienced a slight decrease of 0.4% [5] 4. **Piglet Inventory Stability** The inventory of piglets has stabilized in the last two months, with only a slight decrease, potentially linked to high mortality rates in July and August [6] 5. **Impact of National Production Control Policies** National policies aimed at controlling production have led to a slight decrease in the number of mother pigs. Despite a target to reduce 1 million mother pigs, the slow market demand has hindered the pace of reduction [7][9] 6. **Current Market Conditions** The market is experiencing an increase in the elimination of mother pigs, with large pig prices losing their advantage, sometimes falling below standard pig prices. This indicates a weak market demand [8] 7. **Future Production Reduction Goals** There is a target to reduce the output of pigs by approximately 5% in 2026 to address supply-demand imbalances, with a focus on reducing the number of mother pigs to control overall output [9][11] 8. **Current Capacity Decrease Trends** The current capacity reduction is just beginning, expected to continue until January, with a potential acceleration if demand improves [12] 9. **Weather Impact on Disease and Production** Recent cooling has led to some minor disease issues, but no severe outbreaks have been reported. However, weather changes pose potential risks to production [13] 10. **Price Trends and Future Expectations** Prices have seen a significant drop due to increased supply and decreased demand, with expectations of a weak rebound if weather conditions improve and demand rises [14][16] 11. **Regional Price Disparities** There have been notable fluctuations in regional price differences, influenced by disease outbreaks and supply-demand relationships, with southern regions experiencing overcapacity [20][21] 12. **Future Capacity Expansion in Southern Regions** There is no specific data on capacity expansion in southern regions, but many enterprises are shifting focus from northern to southern regions for new investments [22] Other Important Insights - The industry is currently facing significant losses, with losses exceeding 100 yuan per head for both fat and piglets, which could lead to a reduction in overall production capacity if sustained [18][19]

Core Viewpoint - The domestic live pig market has shown signs of rebound in recent days, with prices stabilizing after a significant decline, although short to medium-term pressures remain evident due to oversupply [1][2][3] Price Trends - The live pig futures price fell over 12% in October, reaching a low of 11,120 yuan/ton, following a decline of 11.36% in September [1][2] - On October 15, the average pig price in Guangdong was reported at 4.98:1, entering a warning zone for excessive decline [2] - The national average pig price saw a slight increase of 0.01 yuan/kg on October 14 and further rose by 0.11 yuan/kg on October 15, surpassing 11 yuan/kg [3] Supply and Demand Dynamics - Increased supply from breeding farms and insufficient demand have led to a rapid decline in pig prices since September [2] - The market is currently experiencing a supply surplus, with significant outflows from major breeding enterprises [5][7] Market Sentiment and Investment - Recent inflows into livestock breeding ETFs indicate market optimism regarding short-term price stabilization and long-term industry potential [5] - Analysts suggest that the ongoing policy measures aimed at controlling production capacity and reducing weights will support a long-term price increase [7][9] Future Outlook - The industry is expected to enter a capacity reduction cycle, with potential price increases anticipated in the second half of next year [7][9] - Short-term price pressures are likely to persist due to high production levels and reduced consumer demand post-holidays [9][10]

Investment Rating - Industry rating is maintained at "Outperform the Market" [5] Core Viewpoints - The short-term rebound in raw milk prices does not change the ongoing destocking trend, but a price turning point is anticipated [1] - After significant destocking, beef cattle prices are gradually recovering, with September average prices reaching 25.99 CNY/kg, up 10.7% from the beginning of the year [2] - The rise in beef cattle prices is positively impacting the prices of cull cows, which in September averaged 19.33 CNY/kg, up 19.2% year-to-date [3] Summary by Sections 1) Raw Milk Price Analysis - Despite a short-term price rebound due to holiday stocking and school milk demand, overall prices remain below cost levels, leading to continued industry losses and destocking [1] - The September cow inventory decreased by 0.18% month-on-month, with a cumulative reduction of approximately 8% [1] 2) Beef Cattle Price Analysis - The average price of beef cattle in September was 25.99 CNY/kg, reflecting a 10.7% increase since the start of the year and a 15.6% increase from previous lows [2] - The average price of calves rose to 32.42 CNY/kg, marking a 39% increase from the lowest point in 2024 [2] 3) Impact of Beef Prices on Dairy Companies - The increase in beef cattle prices has led to a rise in cull cow prices, which is expected to improve the financial performance of dairy companies [3] - The trend of narrowing losses from cull cows is likely to continue for an extended period due to the long replenishment cycle in the beef industry [3] 4) Investment Recommendations - The core logic of the sector remains unchanged, with expectations for a price turning point and attractive valuations [4] - Recommended stocks include: Yuran Dairy, China Shengmu, Aoyuan Group, Modern Dairy, and Tianrun Dairy for dairy; and China Shengmu, Guangming Meat, and Fucheng Co. for beef [4]

Summary of Conference Call on Swine Industry Trends Industry Overview - The swine industry is currently experiencing a significant decline in pig prices, with national average prices dropping below 5.5 yuan per kilogram, leading to severe losses for breeding enterprises [1][2][3] - Factors contributing to the price drop include a sharp decrease in slaughter volumes post-holiday, delayed market entry of breeding enterprises, and environmental pressures in southern regions causing unsold piglets [1][2] Key Insights and Arguments - **Price Trends**: The average price of pigs has fallen sharply from a peak of 7 to 7.5 yuan per kilogram in the first half of 2025 to below 5.5 yuan, indicating a significant market downturn [2] - **Supply and Demand Dynamics**: It is anticipated that pig supply will continue to increase in Q4 2025 and the first half of 2026, while consumer demand remains limited, leading to a pessimistic outlook among breeding enterprises [5][6] - **Breeding Strategies**: Breeding enterprises are expected to increase their slaughter volumes to dilute costs, with no reduction in overall output anticipated [6][12] - **Market Sentiment**: Smallholders are still engaging in speculative buying despite low prices, indicating a high-risk market environment [8] Additional Important Points - **Future Price Predictions**: Prices are expected to remain volatile, with October potentially being the lowest point of Q4, followed by a slight improvement in November due to seasonal demand [9][16] - **Piglet Prices**: The price of piglets is projected to continue declining, with a bottom index for 7 kg piglets estimated between 100 to 120 yuan, indicating further room for price drops [3][10] - **Culling Trends**: The current high prices for culling sows suggest that the market has not yet seen significant capacity reduction, as prices should ideally reflect a lower market equilibrium [7][11] - **Environmental Regulations**: Strict environmental policies in southern regions are exacerbating market pressures, leading to difficulties in breeding and increased need for culling to alleviate housing pressures [18] Conclusion The swine industry is facing a challenging environment characterized by declining prices, increased supply, and limited demand. Breeding enterprises are adapting by increasing slaughter volumes, but the overall market sentiment remains pessimistic. The interplay of environmental regulations and market dynamics will continue to shape the industry's trajectory in the coming months.

Core Insights - The pork industry is facing a "旺季不旺" (peak season not prosperous) situation, with both futures and spot prices experiencing unexpected declines [1][2] - The main futures contract for live pigs closed at 11,125 yuan/ton on October 13, marking a 2.88% drop and a cumulative decline of 21% for the year, with prices down over 40% from last year's peak [1] - Spot pork prices have also fallen continuously since the third quarter, currently reported at 10.92 yuan/kg, below 11 yuan/kg [1] Supply and Demand Dynamics - The imbalance between supply and demand is leading to persistent price declines, with high levels of breeding sows and weak consumer demand [1] - The current supply situation is not expected to improve in the short term, indicating limited upward price momentum for pork [1] - Companies in the pork sector have increased their slaughter volumes in September to compensate for lower prices [1] Industry Performance Outlook - The performance of listed pork companies is likely to show a year-on-year decline in the third quarter due to insufficient capacity reduction and high prices from the previous year [1] - The continuous decline in pork prices since October is expected to cast a shadow over the fourth-quarter performance of listed pork companies [1] Capacity Reduction and Policy Impact - The pig farming industry entered a capacity reduction phase in July, but prices have accelerated downward since the third quarter, reflecting slower-than-expected capacity reduction progress [1] - According to policy guidance, reducing the number of breeding sows to around 39.5 million could positively impact pork prices [2]

Group 1 - The core issue in the pork market is the imbalance between supply and demand, leading to a significant drop in both futures and spot prices, with futures prices hitting a historical low of 11,125 yuan/ton, down 21% year-to-date and over 40% from last year's peak [2][3] - As of October 13, the national pork spot price has fallen to 10.92 yuan/kg, a decrease of 1.26 yuan/kg from before the National Day holiday, reflecting a year-on-year drop of 39.43% [3][4] - The high inventory of breeding sows, which stood at 40.62 million heads as of the end of September, continues to exert downward pressure on prices, with no immediate signs of improvement in supply conditions [3][4] Group 2 - The pork industry is currently in a phase of capacity reduction, but the progress is slower than expected, as indicated by the 28.6% cumulative price drop since July [4][5] - Major pork companies are facing operational challenges, with sales prices and revenues declining significantly in September, prompting some to increase slaughter volumes to compensate for lower prices [5][6] - Companies like Wen's Foodstuffs and New Hope reported increases in slaughter volumes in September, with Wen's selling 3.33 million pigs, a year-on-year increase of 32.46%, despite achieving the lowest sales prices of the year [5][6] Group 3 - Muyuan Foods has adjusted its breeding sow inventory to 3.305 million heads and is not considering adding new sows in the short term, while also reducing the average weight of slaughtered pigs [6][7] - Smaller companies like Zhengbang Technology have seen significant increases in slaughter volumes, with a year-on-year growth of 107.64% in September, but overall revenue for listed companies remains under pressure due to lower prices [7][10] - The outlook for pork prices remains pessimistic, with expectations of continued supply pressure and weak terminal demand, making it difficult to reverse the current supply-demand imbalance [7][10]

Core Viewpoint - The domestic pork market is experiencing a "peak season not booming" situation, with both futures and spot prices falling unexpectedly, indicating a significant supply-demand imbalance in the industry [2][3][4]. Supply and Demand Dynamics - As of October 13, the spot price of pork has dropped to 10.92 yuan/kg, down 1.26 yuan/kg from before the National Day holiday, reflecting a year-on-year decline of 39.43% [3][4]. - The number of breeding sows remains high, with a total of 40.62 million as of the end of September, which is 104.2% of the normal holding capacity, contributing to the oversupply of pigs [3][4]. - The industry is in a phase of "capacity reduction," but the progress is slower than expected, leading to continued price declines [4][5]. Company Performance - Major listed pig companies are facing operational challenges, with sales prices and revenues declining significantly in September. For instance, Wens Foodstuff Group sold 3.33 million pigs in September, a year-on-year increase of 32.46%, but at a lower average price of 13.18 yuan/kg, reflecting a 30.81% drop [5][6]. - Muyuan Foods reported a sales revenue of 9.066 billion yuan in September, down 22.46% year-on-year, with a notable decrease in the number of pigs sold [6][7]. - Smaller companies like Zhengbang Technology have seen significant increases in output, with a year-on-year growth of 107.64% in September, but overall revenue remains under pressure due to falling prices [7][8]. Future Outlook - The outlook for pork prices remains pessimistic, with expectations of continued downward pressure due to persistent supply and weak demand [7][8]. - The industry is closely monitoring the effectiveness of capacity reduction policies, which aim to lower the number of breeding sows to around 39.5 million to potentially stabilize prices [5][6].

Core Insights - The domestic pork market is experiencing a "旺季不旺" (peak season not prosperous) situation, with both futures and spot prices unexpectedly declining [1][2] - As of October 13, the main contract for live pig futures closed at 11,125 yuan/ton, marking a 21% decline year-to-date and over 40% drop from last year's peak [1][2] - The current supply-demand imbalance, characterized by high breeding sow inventory and weak consumer demand, is expected to keep pork prices low in the short term [1][2] Supply and Demand Dynamics - The national pork (外三元) spot price was reported at 10.92 yuan/kg as of October 13, down 1.26 yuan/kg from before the National Day holiday, reflecting a year-on-year decline of 39.43% [2] - The breeding sow inventory remains high at 40.62 million heads as of the end of September, which is 104.2% of the normal holding capacity, indicating continued pressure on supply [2][3] - The industry is undergoing a "反内卷" (anti-involution) phase, with government policies aimed at reducing breeding sow numbers and controlling production capacity [2][3] Industry Performance - The pig farming industry has entered a phase of capacity reduction since July, but prices have continued to decline, with a cumulative drop of 28.6% since early July [3] - The demand side is weak, with the consumption peak during the Mid-Autumn Festival and National Day already passed, leading to expectations of a short-term consumption lull [3] - Listed pig companies are facing operational challenges, with many increasing slaughter rates in September to compensate for lower prices [3][4] Company-Specific Developments - Major companies like Wen's Foodstuffs (温氏股份) and New Hope (新希望) reported increased slaughter volumes in September, with Wen's selling 3.33 million pigs, a 32.46% year-on-year increase [4] - Despite lower sales prices, these companies managed to achieve revenue through volume growth, with Wen's average selling price at 13.18 yuan/kg, down 30.81% year-on-year [4] - Muyuan Foods (牧原股份) reported a 22.46% decrease in revenue in September, but is adjusting its breeding strategy to enhance future growth, including increasing its piglet sales target for 2025 [5] Market Outlook - Smaller companies like Zhengbang Technology (正邦科技) saw significant increases in slaughter volumes, but overall revenue for listed pig companies is declining due to lower average prices [6] - The ongoing decline in pork prices is expected to cast a shadow over the fourth-quarter performance of pig companies, with market forecasts remaining pessimistic due to persistent supply pressures and lack of demand recovery [6]

Core Viewpoint - The agricultural, animal husbandry, and fishery sector continues to rise against market pressure, with the first agricultural ETF (159275) showing strong performance and attracting significant net inflows of over 52 million yuan on the previous trading day [1][2]. Group 1: Market Performance - On October 13, the agricultural, animal husbandry, and fishery sector maintained an upward trend, with the agricultural ETF (159275) rising by 0.4% [1]. - The agricultural ETF (159275) has a low valuation, with a price-to-book ratio of 2.64, placing it in the 32.14% percentile over the past decade, indicating a favorable long-term investment opportunity [1]. Group 2: Policy Impact - The "anti-involution" measures implemented since May are expected to positively influence pig prices in the coming year, with various government bodies focusing on controlling production capacity and reducing weights [1]. - The recent policy implementations are showing initial positive effects, and with increased enforcement, a faster reduction in industry capacity is anticipated in the fourth quarter, leading to a potential rise in pig prices in the second half of next year [1]. Group 3: ETF Composition - The agricultural ETF (159275) passively tracks the CSI Agricultural, Animal Husbandry, and Fishery Index, with major holdings including leading companies such as Muyuan Foods, Wens Foodstuff Group, and Haida Group [2]. - The index has a high concentration of holdings, with the top ten industries accounting for over 90% of the weight, focusing on opportunities across the entire agricultural and fishery supply chain [2].

Investment Rating - The report suggests a cautious approach towards the agricultural sector, particularly in pig farming, with a focus on selecting low-cost quality enterprises [2][22]. Core Insights - The agricultural sector index outperformed the Shanghai Composite Index, indicating a positive trend in the agricultural market [12][13]. - The pig farming industry is currently facing significant losses due to falling prices, with an average price of 10.91 yuan/kg, leading to a potential reduction in production capacity [21][22]. - The poultry sector shows signs of stabilization, with yellow feathered chicken prices remaining resilient due to improved downstream demand [3][37]. - The beef market is expected to see price increases as it enters the consumption peak season, while dairy cow inventory is on a downward trend [4][42]. - The planting industry is experiencing pressure from supply and demand, but potential price increases could occur if there are significant reductions in grain production [5][49]. - Feed prices are stabilizing, and the aquaculture sector is showing upward trends in pricing [62][68]. Summary by Sections Pig Farming - The national average pig price has dropped below 11 yuan/kg, with the industry currently in a loss-making state. The average weight of pigs at slaughter is 128.48 kg, indicating high inventory levels despite price declines [2][21]. - Short-term expectations indicate further price declines, but medium to long-term prospects remain positive for quality enterprises [22]. Poultry Farming - The average price for white feathered chicken is 6.88 yuan/kg, with a slight decrease from the previous week. The profitability of parent breeding chickens has improved, while broiler profitability remains under pressure [3][36]. - The sector is expected to stabilize as consumer demand gradually recovers [37]. Livestock - Live cattle prices in Shandong are at 27.20 yuan/kg, with expectations for steady price increases as the consumption season approaches. The dairy sector is experiencing a reduction in inventory due to ongoing financial pressures [4][42]. - The beef cycle is anticipated to begin anew, with a focus on the synergy between meat and dairy production [43]. Planting Industry - Recent fluctuations in grain prices are noted, with corn prices at 2215.71 yuan/ton and soybean prices at 3987.37 yuan/ton. The planting sector is stabilizing, with potential improvements if significant reductions in crop yields occur [5][48]. - The report emphasizes the importance of advancements in seed technology and production efficiency [49]. Feed and Aquaculture - Feed prices for fattening pigs and poultry remain stable, while aquaculture prices are showing positive trends, particularly for shrimp and fish products [62][68].