Core Viewpoint - The holiday consumption effect on pig prices is weakening, with prices continuing to decline despite the recent National Day and Mid-Autumn Festival [1][3] Price Trends - The average price of live pigs in China was 12.90 yuan/kg in the first week of October, down 2.8% from the previous week and 29.5% year-on-year [1][3] - Prices have dropped over 22% compared to the beginning of the year, reaching a low point for the year [1] - As of October 13, the average price for external three yuan pigs was 10.81 yuan/kg, indicating a slight daily decrease [1][3] Supply and Demand Dynamics - The supply of pigs remains abundant due to previous production capacity releases and ongoing policies to control weight and reduce production [2][4] - Analysts expect a potential increase in demand as the weather cools and seasonal activities begin, which may provide some support for prices [2][4] - The market may see a dual increase in supply and demand in December, but supply growth may outpace demand, leading to further price declines [2] Industry Challenges - The continuous decline in pig prices is impacting breeding profits, with many producers facing losses [6] - As of October 10, self-breeding and pig fattening operations reported average losses of 206.91 yuan and 409.19 yuan per head, respectively [6] - Smaller producers are under significant pressure due to higher costs, while larger enterprises are better positioned to manage risks [6][7] Production Capacity Adjustments - The Ministry of Agriculture has emphasized the need for strict production capacity controls, aiming to reduce the breeding sow population by approximately 1 million [6][7] - Some companies, like Muyuan Foods, have begun to reduce their breeding sow numbers and manage slaughter weights to stabilize the industry [7] - The speed of production capacity reduction will be crucial for future price trends, with expectations of continued supply pressure if adjustments are slow [6][7]

Core Viewpoint - The current pig prices are weak both in reality and expectations, combined with policy drivers, indicating that the pig farming industry is likely to initiate capacity reduction [1][2]. Group 1: Industry Overview - The pig farming industry is experiencing a rapid shift towards losses, with average profits for large-scale farms dropping to -57 CNY per pig in August, down from 21 CNY in July, and for smallholders, the average profit fell to -109 CNY per pig from 6 CNY in July [2]. - The price of fat pigs is nearing 11 CNY per kilogram, while the price for 7 kg weaned piglets has dropped below 200 CNY per head, leading to a comprehensive loss across the industry [1][2]. - The number of breeding sows has slightly decreased, with a total of 40.38 million sows reported at the end of August, a reduction of 40,000 from the previous month, indicating a stabilization year-on-year [2]. Group 2: Price and Profit Trends - In August, the average price for market pigs fell to 14.23 CNY per kilogram, a decrease of 4.1% month-on-month and 31% year-on-year, while the average price for piglets was 33.63 CNY per kilogram, down 5.9% month-on-month and 24% year-on-year [2]. - The industry is expected to see further price declines, with fat pig and piglet prices having reached their lowest points of the year, suggesting a potential for continued market-driven capacity reduction [1]. Group 3: Investment Recommendations - The pig farming sector is viewed positively, with expectations that quality companies will continue to generate profits and increase dividend rates, driving long-term performance and valuation improvements [3]. - The policy and market dynamics are expected to facilitate capacity reduction in the pig farming industry, which will support long-term performance improvements in the sector [3]. - Relevant investment targets include Muyuan Foods (002714), Wens Foodstuff Group (300498), Shennong Group (605296), and Juxing Agriculture (603477) [3].

Group 1 - Recent capital inflow into the breeding sector, with the breeding ETF (159865) seeing over 970 million yuan in net inflows in the last 10 trading days, and over 10 million shares subscribed today [1] - On September 16, the National Development and Reform Commission held a meeting signaling a clear policy for reducing pig production capacity [1] - Pacific Securities indicates that both the fattening and breeding segments of the industry have turned from profit to loss, enhancing the market-driven capacity reduction [1] Group 2 - The breeding ETF (159865) tracks the China Securities Livestock Breeding Index, with approximately 60% exposure to "pigs," presenting investment opportunities for interested investors [1]

Report Industry Investment Rating No relevant content provided. Core Viewpoints - Recently, the prices of live hog futures and spot have dropped significantly, with the spot price falling from 15.26 yuan/kg in early July to around 11.3 yuan/kg, a cumulative decline of 26%, and the futures price dropping from a previous high of 14,745 yuan/ton to 11,320 yuan/ton, a cumulative decline of 23%. The decline in hog prices has led to some de - capacity effects, but the far - month futures mainly follow the spot and near - month prices downwards [3]. - The continuous decline in live hog prices is due to the concentrated release of hog production capacity, increased overall supply, and limited demand support, resulting in an obvious supply - demand imbalance. In the short term, the supply pressure remains, and the rebound space of spot prices is limited. The far - month support may also be limited [4]. - Although the current decline in live hog prices is relatively large, there are differences in the impact on near - term and far - term prices, and the upward driving force is relatively limited [30]. Summary by Directory Preface Summary - The prices of live hog futures and spot have continued to decline rapidly recently, and the far - month futures mainly follow the spot and near - month prices downwards [3]. Fundamental Situation 1. Limited Release of Previous Production Capacity, Limited Price Decline - The market was generally pessimistic about the live hog price this year due to high previous production capacity data. However, before the recent decline, the live hog spot price mainly fluctuated, with the price center at 14 - 15 yuan/kg. This was because the previous production capacity was not fully released. In the first quarter, the slaughter volume decreased by 2.23% year - on - year, and the price was flat year - on - year; in the second quarter, the slaughter volume increased by 0.62% year - on - year, and the price decreased by 10.67% year - on - year [8]. - The slow release of previous production capacity was affected by factors such as the rapid increase in hog slaughter weight due to farmers' pen - holding, more secondary fattening, and the relatively large proportion of large - scale enterprises' slaughter, which supported prices [9]. 2. Accumulation of Supply Surplus Pressure, Obvious Increase in Slaughter Volume - Although the third - quarter slaughter data has not been released, the year - on - year price decline of about 30% indicates a significant increase in actual slaughter volume. The increase in recent slaughter volume is due to the increase in secondary fattening slaughter, the active weight reduction in the market since May, and the reduction in the year - on - year decline of small - scale farmers' slaughter since August [12]. 3. Slaughter Pressure Still to Be Reflected, Prices to Run Weakly - The slaughter volume of various groups is increasing. The slaughter plan of large - scale enterprises this year has increased by 22.72% year - on - year, and it is expected that their subsequent slaughter volume will remain relatively high. The slaughter volume of ordinary farmers may also increase. The secondary fattening inventory is still relatively high, and the overall enthusiasm for slaughter is expected to remain high [15][16]. - The demand for live hogs has declined, with high slaughter volume, increasing frozen product inventory, a significant decline in the fresh sales rate, and limited demand support for prices [25]. 4. Gradual Initiation of Capacity Reduction, Medium - and Long - Term Price Support - As of the week ending September 30, the price of 7 - kg piglets was 212 yuan/head, lower than the market cost, and the purchase of piglets for fattening was also in a loss state. The market's capacity reduction has become more obvious, with an increase in the number of culled sows [26]. - In the short term, reducing the slaughter weight and volume may help stabilize prices, but the improvement space is limited. In the medium and long term, the overall hog production capacity is still relatively high, and the current piglet price provides some support, while the futures price is under pressure [26][30]. Comprehensive Analysis & Strategy Evaluation 1. Comprehensive Analysis - In the short term, the live hog market may still face pressure. The subsequent slaughter volume is expected to increase, and the overall supply will remain at a relatively high level. The stabilization of spot prices is mainly affected by slaughter weight and motivation. A further decline in slaughter weight may drive a phased rebound in prices, but medium - and long - term price changes are still affected by production capacity [31]. 2. Strategy Recommendation - Unilateral: Do not easily short - sell on the falling market. Instead, short - sell on rebounds and wait for a significant decline in slaughter weight. Do not easily determine the bottom for far - month contracts, as capacity changes have a significant impact [5][32]. - Arbitrage: Adopt a reverse arbitrage strategy for LH15 [5][35]. - Options: Sell call options on near - month contracts at high prices [5][35].

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]