Core Viewpoint - The pork market is experiencing a "旺季不旺" (旺季不旺) situation during the traditional demand peak season, with prices under pressure due to oversupply and weak consumption [1][2]. Market Performance - The national mainstream transaction price for live pigs is running between 11.0 to 12.6 yuan/kg, with prices in the Sichuan-Chongqing region dropping below 11 yuan/kg [1]. - On October 9, live pig futures opened lower, with the main contract hitting a low of 11,535 yuan/ton, down 5.88% by midday [1]. - Trading volume increased to over 50,000 lots, a growth of more than 30% compared to September 30 [1]. Supply and Demand Dynamics - Analysts indicate that the simultaneous decline in both futures and spot prices reflects a pessimistic market outlook regarding future supply and demand dynamics [1]. - The current supply pressure is expected to persist, with the national pig output maintaining an upward trend due to high breeding sow inventory levels [2][3]. Policy and Industry Response - The Ministry of Agriculture and Rural Affairs is actively promoting high-quality development in the pig industry, emphasizing strict capacity control measures [2]. - Despite positive policy signals, the actual pace of capacity reduction is slower than expected, with breeding sow inventory remaining above the target adjustment level [2]. Future Outlook - Analysts believe that the current pig prices are in a bottoming phase, with short-term pressures from strong supply and weak demand [3]. - The potential for a seasonal rebound in Q4 will depend on the weight of pigs at market release; a decrease in weight could alleviate supply pressure and allow for price recovery, albeit with limited upward potential [3][4].

Report Summary 1) Report Industry Investment Rating No specific industry investment rating is provided in the report. 2) Core Viewpoints - After the double festivals, the hog futures market declined significantly, with the LH2511 contract closing at 11,595 yuan/ton, a drop of 5.88% [1]. - In the short - term, the pressure from the double - festival hog sales will gradually ease, and prices are expected to stabilize as the supply pressure from individual farmers decreases. However, in the medium - to - long - term, hog supply pressure will continue to be released, and hog prices are not optimistic. Policy - driven capacity reduction will take time to show results, and spot prices are expected to face pressure until the first half of next year. The recommended trading strategy is to short on rallies in the futures market and conduct reverse spreads for LH1 - 5 and LH3 - 7 [7]. 3) Summary by Directory Driving Factor 1: Increased Hog Sales during Double Festivals and Released Supply Pressure - Before the double festivals, due to high expectations for demand, individual farmers and secondary fattening households held back hogs. By the end of September, the average hog slaughter weight reached a record high for the same period. As of the week of September 25, the average slaughter weight was 128.55 kg, a year - on - year increase of 2.87 kg (2.28%). Group - farmed hogs had an average weight of 123.99 kg, while individual - farmed hogs reached 143.92 kg. After the festivals, with weakening demand, individual farmers panicked and sold more heavy hogs, leading to a sharp increase in supply and downward pressure on spot prices [2]. Driving Factor 2: Continuous Recovery of Hog Supply and Pessimistic Market Outlook - China currently has an oversupply of breeding sows, with rapidly improving production efficiency. However, the process of reducing the sow population is slow, and hog sales are expected to keep growing in the next six months. As of the end of August, the national breeding sow population was 40.38 million, equivalent to 103.5% of the normal level, indicating a slow capacity reduction. The government aims to reduce the capacity by 1 million, but due to low industry costs and previous long - term profitability, the amount of culled sows is small, and capacity reduction is difficult without strict policies [6]. Market Outlook - During the National Day holiday, hog prices dropped sharply, with spot prices falling below 6 yuan/jin. Individual farmers increased sales, but weak demand continued to suppress prices. In the short - term, prices are expected to stabilize as the supply pressure eases. In the medium - to - long - term, supply pressure will persist in the fourth quarter, and hog prices are not expected to improve. Policy - driven capacity reduction will take time, and spot prices are likely to face pressure until the first half of next year [7].

Group 1 - The article highlights a significant inflow of 113 million shares into the breeding ETF (159865), indicating strong investor interest in breeding assets [1] - Recent low pork prices are noted as a critical factor, with pork being a core commodity that influences the Consumer Price Index (CPI) by over 20%, emphasizing its importance to the macro economy [1] - A meeting held on September 16, 2025, by the Ministry of Agriculture and Rural Affairs and the National Development and Reform Commission focused on regulating pig production capacity, mandating leading companies to reduce production by year-end, which signals an accelerated phase of capacity reduction in the pig industry [1] Group 2 - The article suggests that the breeding sector is entering a favorable configuration window, making it a potential area for investment [1] - For investors without stock accounts, it recommends the Guotai CSI Livestock Breeding ETF Connect A (012724) and Guotai CSI Livestock Breeding ETF Connect C (012725) as alternative investment options [1]

Investment Rating - The industry investment rating is "Positive" (maintained) [1] Core Insights - The investment logic for the pig industry continues to strengthen due to dual catalysts from policies and diseases, with a recommendation for long-term positioning despite current price lows [3][5] - The pet food export volume continues to grow year-on-year, indicating a sustained positive trend in the pet food market [4][28] Summary by Sections Weekly Observation - The pig price is running at a low level, with the national average price at 12.71 yuan/kg as of September 21, 2025, down 0.50 yuan/kg week-on-week and down 5.73 yuan/kg year-on-year [3][13] - The average weight of pigs sold is 128.45 kg, showing a slight increase week-on-week and year-on-year [3][13] - The pig industry is expected to see a strong execution of policies aimed at capacity reduction, which will enhance the expectations for substantial capacity reduction [3][13] Weekly Viewpoint - The investment logic for the pig industry is marginally improving, with a recommendation for companies such as Muyuan Foods, Wens Foodstuff Group, and others [5][24] - The domestic feed market is benefiting from the post-cycle of poultry and livestock, with strong overseas demand supporting prices [5][25] - The pet food sector is experiencing a rise in domestic brands due to consumption upgrades and tariff barriers [5][28] Market Performance (September 15-19) - The agricultural index underperformed the market by 1.40 percentage points, with the agricultural index down 2.70% [6][29] - Leading stocks included Shennong Biotechnology (+9.36%), Xuelong Biotechnology (+7.64%), and Tianma Technology (+3.90%) [6][29] Price Tracking (September 15-19) - The average price of pigs was 12.68 yuan/kg, down 0.66 yuan/kg from the previous week [7][37] - The average price of piglets was 22.38 yuan/kg, down 1.57 yuan/kg week-on-week [7][37] - The average price of beef was 65.60 yuan/kg, showing a slight increase [44][37] Key News (September 15-19) - Notification regarding the central reserve frozen pork storage auction scheduled for September 23, 2025, with 15,000 tons available for auction [35]

Investment Rating - The industry investment rating is "Positive" (maintained) [1] Core Viewpoints - The report indicates that the pig price is expected to remain stable in the future despite a decline in August due to factors such as heavy weight slaughtering and the spread of African swine fever [3][13] - The average national pig sales price in August 2025 was 13.77 yuan/kg, down 5.35% month-on-month and down 32.35% year-on-year [3][13] - The report highlights that the supply of pigs may gradually tighten in the future due to a decrease in the proportion of large pigs in stock and an increase in the proportion of large pigs being slaughtered [4][17] Summary by Sections Industry Overview - In August 2025, the national pig slaughter volume was 4.3388 million heads, an increase of 4.34% month-on-month and 5.66% year-on-year [3][13] - The report notes that the completion rate of pig slaughtering plans was 100.04% in August, with a planned increase of 3.92% in September compared to actual slaughter in August [3][13] Market Dynamics - The structure of pig slaughtering shows an increase in the proportion of large pigs (over 150kg) being slaughtered, while the proportion of large pigs in stock has decreased [4][17] - The average profit for self-breeding and self-raising pigs in August was 36.80 yuan/head, a decrease of 63.80% month-on-month [5][20] Company Performance - A total of 12 listed pig farming companies reported a combined slaughter of 15.116 million heads in August, an increase of 29.79% year-on-year [6][23] - The average sales price of pigs for major listed companies decreased month-on-month, with specific companies reporting the following prices: - Muyuan Foods: 13.51 yuan/kg, down 5.5% - Wens Foodstuffs: 13.90 yuan/kg, down 6.5% - New Hope Liuhe: 13.54 yuan/kg, down 6.9% [7][28]

Core Viewpoint - The recent fluctuations in national pork reserves and declining pig prices indicate a critical phase for the pork industry, with the pig-to-grain ratio falling below the warning line, prompting government intervention to stabilize prices and encourage quality production [1] Group 1: Market Dynamics - The National Development and Reform Commission auctioned 10,000 tons of domestic frozen pork at prices between 19.90 to 20.00 yuan per kilogram, translating to a live pig price of approximately 13.6 to 13.8 yuan per kilogram, marking a temporary bottom for current pork prices [1] - The agricultural sector is actively working to optimize production capacity by eliminating inefficient sows and controlling weights, although the overall impact on capacity reduction remains limited [2][3] Group 2: Production and Capacity - In July, the number of sows eliminated increased by 2.1% month-on-month, while the total breeding sow inventory decreased by 10,000 heads to 40.42 million heads [2] - Major companies are reducing costs and improving efficiency, with leading firms achieving production costs around 12 yuan per kilogram, while others hover around 13 yuan per kilogram [3] Group 3: Price Trends and Forecasts - As of mid-2025, live pig inventory reached 42.447 million heads, with a year-on-year increase of 2.2%, but prices have dropped to a five-year low of 14,677 yuan per ton due to weak demand and high slaughter losses [5] - The market is expected to face increased supply pressure in the second half of the year, with a predicted rise in commodity pig supply from September to November, limiting significant price fluctuations [5][6] Group 4: Future Considerations - The uncertainty in the market largely hinges on whether producers will continue to follow policy guidance to reduce weights, with average weights for pigs being monitored closely [6] - Short-term price increases may occur due to seasonal factors, but a return to a demand lull post-holidays is anticipated, which could suppress prices [6]

Report Title - 20250829 Zhonghui Futures Monthly Report on Live Pigs: Gradual Reduction of Reproductive Sows Benefits Far - Month Contracts, Focus on Peak Season Performance [1] Core View - In the short - term, there is supply pressure, but demand is expected to improve marginally in the next 1 - 2 months. The spot and near - month contracts face high weight reduction and production capacity realization pressure, but the price may strengthen during the peak season. The far - month contracts may rise as production capacity is gradually reduced, and investors can consider buying at low prices or using reverse spread strategies. The reference range for the main contract is [13700, 14500] [4][5] Summary by Directory 1. Spot Performance - In August, the national average live pig price decreased by 0.44 yuan to 13.82 yuan/kg. Prices in Henan, Jiangsu, Hunan, Chongqing, and Sichuan all declined [3][15] - The average spot price of culled sows in sample breeding enterprises decreased by 0.01 yuan to 9.86 yuan/kg, and the average price of 50kg binary sows decreased by 10.96 yuan to 1627.14 yuan/head. The market for culled sows continued to see a slight increase in volume [3][17] - The average出栏 price of 7kg piglets decreased by 80.47 yuan to 364.29 yuan/head, and the average出栏 price of 15kg piglets decreased by 123.96 yuan to 403.75 yuan/head [3][20] 2. Logic and Outlook - **Logic**: In August, the planned出栏 volume of Steel Union sample enterprises was 13.2257 million heads, a 5.26% increase. The proportion of large pigs出栏 remained high. From January to July 2025, the number of newborn piglets increased, indicating potential growth in出栏 volume in the second half of the year. High supply pressure is expected to continue until May 2026. The profit of self - breeding and self - raising continued to weaken, which is beneficial for the reduction of far - month production capacity. Demand is expected to improve marginally in the next 1 - 2 months [4] - **Outlook**: The spot and near - month contracts face high weight reduction and production capacity realization pressure, but the price may strengthen during the peak season. The far - month contracts may rise as production capacity is gradually reduced, and investors can consider buying at low prices or using reverse spread strategies [5] 3. Key Data - **Spot Price**: Various prices such as live pigs, sows, and piglets showed a downward trend in August [3][6] - **Short - term Supply**: The official inventory at the end of the second quarter was 424.47 million heads, an increase of 7.16 million heads. The planned出栏 volume of Steel Union sample enterprises in August increased. The average出栏 weight of live pigs increased, while the average weight after slaughter of white - striped pigs decreased. The standard - fat price difference expanded, and the proportion of different weight - range inventories changed [6][23][25] - **Medium - term Supply**: In July, the national piglet survival rate decreased slightly, the number of piglet births increased, and piglet feed sales decreased slightly. The market supply of live pigs is expected to increase in Q4 2025 [6][29] - **Long - term Supply**: In July, the increase in reproductive sows in large - scale breeding enterprises was basically zero, the number of culled reproductive sows increased, and the official number of reproductive sows decreased [6][31] - **Demand**: In August, terminal consumption showed obvious off - season characteristics at first and then recovered. The slaughtering rate, daily slaughter volume, and frozen product storage rate changed slightly, while the fresh - sales rate decreased slightly [6][33] - **Cost**: In August, the corn price decreased, and the soybean meal price increased. The cost of purchasing piglets and self - breeding and self - raising decreased [39][41] - **Profit**: In August, due to increased supply and limited demand recovery, the breeding profit decreased. The self - breeding and self - raising profit turned negative, and the loss of the mode of purchasing piglets increased [43] - **Price Ratio**: In late August, the national average pig - grain price ratio fell below 6:1, entering the third - level warning range. The state plans to conduct central frozen pork reserve purchases, which is beneficial for short - term market sentiment [45]

Report Industry Investment Rating - Not provided Core View - The overall supply of live pigs is abundant, with a 2.04% month-on-month increase in the feed sales volume of sample enterprises in July, which has been increasing for four consecutive months, and an over 5% month-on-month increase in the slaughter plan of large-scale farms in August. Meanwhile, the demand side is difficult to boost. Although the purchase of 10,000 tons of pork can temporarily stabilize market confidence, the real turning point still awaits the substantial progress of capacity reduction [2] Summary by Relevant Catalogs Supply and Demand Analysis - Supply: The feed sales volume of sample enterprises in July increased by 2.04% month-on-month and has been increasing for four consecutive months. The slaughter plan of large-scale farms in August increased by over 5% month-on-month, indicating abundant overall supply [2] - Demand: The demand side is difficult to boost, and the real turning point depends on the substantial progress of capacity reduction [2]

Summary of Conference Call on Swine Industry Industry Overview - The swine industry is currently facing challenges in supply-side regulation despite policies aimed at reducing production capacity. The effectiveness of existing policies is limited, as indicated by the insufficient reduction in breeding sow numbers, which has not met expectations for significant capacity reduction [1][2]. Core Insights and Arguments - Future swine prices are expected to remain stable, with reduced likelihood of significant fluctuations. The increase in the proportion of "smart capacity" is a key factor in the decline of industry volatility. Even during traditional peak seasons, price increases will be constrained [1][3]. - Investment should focus on leading swine farming companies with stable profitability and strong risk resistance, rather than small-scale operators reliant on price volatility [1][4][5]. - Companies with low-cost advantages, regardless of size, will be more valuable in the current market environment. Value stocks, particularly leading companies, are expected to show stronger investment potential due to enhanced internal and external value attributes [1][6][7]. Important but Overlooked Content - Leading swine companies have shown significant improvements in dividend capacity and balance sheet conditions, which enhance their attractiveness to investors. The increase in dividend ratios and amounts is a notable factor [1][7][8]. - The stability of swine prices has improved, allowing leading companies to be recognized as value stocks, with their disadvantages compared to other sectors, such as coal and banking, diminishing [1][7][8]. - The focus should be on companies with cost advantages and strong value attributes within the swine sector for future investment opportunities [1][9].

Core Insights - The swine market is undergoing significant changes, with government regulations aimed at controlling production capacity and market supply [2][4] - Despite a recovery in pig prices last year, underlying issues such as increased production capacity and supply pressures remain [2][4] - The expectation of a strong demand season for pork may not materialize due to oversupply and limited consumption growth [8][10] Supply and Demand Dynamics - As of the end of Q2, the national pig inventory reached 42.447 million heads, a year-on-year increase of 2.2%, indicating a potential rise in market supply in the second half of the year [4] - The increase in piglet numbers, up over 9% year-on-year, suggests that the volume of pigs available for market will also rise [4] - Despite recovery in sectors like tourism and dining, pork consumption remains weak, unable to absorb the increased supply [4] Price Trends and Market Sentiment - The pig price peaked at 21.15 yuan/kg in Q3 due to supply constraints and bullish market sentiment, but a correction was expected as the market could not sustain such high prices [7][8] - The market's previous optimism was driven by a significant drop in production capacity, but this has not translated into sustained price increases [5][8] - The expectation of a strong demand season in Q4 may be undermined by an anticipated surge in supply, leading to a "旺季不旺" (strong season not strong) scenario [8][10] Future Outlook - The process of reducing production capacity is gradual, and without the influence of secondary fattening, pig output is likely to increase [10] - While this year may not see a robust demand season, it is expected to set the stage for a more normalized market in the following year [10] - Cost support is anticipated to keep prices above breakeven levels, indicating a shift towards a micro-profit era for pig farming [10]