Investment Rating - The industry investment rating is "Outperform the Market" and is maintained [2][38] Core Views - The agricultural sector has shown resilience, with the agricultural index rising by 2.52%, outperforming the broader market indices [12] - The pig price has reached a new low for the year, with the average price at 13.54 CNY/kg as of August 11, 2025, indicating a supply-demand imbalance [5][18] - The "anti-involution" policy is expected to support pig prices in the coming year, with significant supply pressures anticipated in the second half of 2025 [6][21] - The white feather chicken sector is experiencing a price increase for chicks due to supply constraints, with chick prices rising to 3.50 CNY per chick [31] Summary by Sections Market Review - The agricultural sector index outperformed the market, ranking 10th among 31 sectors [12] - The pig price has dropped below the breakeven point, reflecting strong supply and weak demand [18] Livestock Industry Tracking - **Pigs**: The average pig price is at a yearly low, with a significant supply pressure expected in the latter half of 2025 [5][18] - **White Feather Chicken**: Chick prices have increased due to supply shortages, with a notable decline in the number of breeding chicks updated in the first half of 2025 [31] Planting Industry Tracking - Sugar prices have continued to decline, while soybean prices have shown a slight increase [33]

Core Viewpoint - The Chinese livestock industry is experiencing a phase of high pig production capacity, prompting the Ministry of Agriculture and Rural Affairs to implement comprehensive production capacity regulation to mitigate risks of price volatility and overproduction [1][2]. Group 1: Market Performance - As of August 12, 2025, the CSI Livestock Breeding Index (930707) increased by 0.68%, with notable gains from companies such as Xiaoming Co. (300967) up 6.50%, Minhe Co. (002234) up 6.19%, and Yisheng Co. (002458) up 3.28% [1]. - The Livestock ETF (159867) rose by 0.46%, marking its third consecutive increase, with the latest price at 0.65 yuan [1]. Group 2: Policy and Regulation - The Ministry of Agriculture and Rural Affairs has announced plans to guide the reduction of approximately 1 million breeding sows to prevent production fluctuations and price instability [1]. - A meeting held on July 23 emphasized strict implementation of production capacity regulation measures, including the rational elimination of breeding sows and control of new production capacity [1]. Group 3: Industry Outlook - Recent policies are expected to accelerate the elimination of inefficient production capacity in the industry, potentially leading to a long-term increase in pig prices, benefiting low-cost and high-quality pig enterprises [1]. - The top ten weighted stocks in the CSI Livestock Breeding Index account for 64.83% of the index, indicating a concentrated market structure [2].

Core Viewpoint - The Ministry of Agriculture and Rural Affairs of China has announced a comprehensive adjustment of pig production capacity to prevent significant fluctuations in production and prices, aiming to reduce the breeding sow population by approximately 1 million heads [1] Group 1: Current Market Conditions - China's pig production capacity is currently at a phase of being excessively high, prompting the need for regulatory measures [1] - Short-term pig prices are under pressure due to factors such as high temperatures, concentrated market supply from individual farmers, and panic selling [1] Group 2: Future Outlook - As temperatures are expected to cool in late August, there may be a marginal improvement in demand, while supply tightens due to previous overselling of pigs, potentially leading to a higher price center for pigs [1] - The third quarter of 2025 is anticipated to be a critical period for policy-driven price increases and adjustments in breeding sows, with ongoing supportive policies expected to strengthen the pig sector [4]

牧原股份（002714）董事长秦英林在官方会议上已经透露了其落实产能调控的主要做法。一是减少能繁 母猪存栏。在已经减少17万头的基础上,计划再减少13万头,到年底前减到330万头。二是下调肥猪出栏均 重。目前头均重125公斤，比5月末下降5公斤,计划7月底降至123公斤,8月底降至120公斤。三是控制二次 育肥。从6月初起,全面停止向二次育肥客户销售肥猪。 新希望在6月份也曾表示,公司严控销售流程,对商品猪只开屠宰类检疫票,不对二次育肥客户渠道销售商 品猪。 生猪行业去产能大幕拉开。农业农村部最新调度显示，当前，我国生猪产能阶段性偏高，为防范生产大 起大落、价格大涨大跌风险，将实施生猪产能综合调控，引导调减约100万头能繁母猪。 能繁母猪存栏是生猪供应的"总开关"，直接决定10个月后的商品猪出栏规模，若调减能繁母猪存量，10 个月后生猪出栏量将相应减少。这意味着，下半年和明年春节后生猪出栏将明显增加，由于生猪的自然 生长周期，从现在开始调减能繁母猪产能，调控效果将于10个月后落地。 在国内猪肉弱需求、强供给的背景下，年内生猪价格持续走低，尤其是进入7月猪肉消费淡季以来，消 费不振使得猪价进一步走低。中国养猪网 ...

Core Insights - The current trend shows a slight decline in live pig spot prices, with the national average price at 13.94 yuan/kg, down 0.08 yuan/kg from last week, reflecting a 0.57% week-on-week decrease and a 31.13% year-on-year decrease [1] - The decline in prices is attributed to weak terminal consumption and an oversupply situation, although policy measures for capacity control may limit further price drops [1] Supply and Demand Dynamics - The breeding sow inventory reached 40.43 million heads as of June 2025, which is 103.7% of the normal holding capacity, indicating a potentially high supply of live pigs in the future [1] - The average pigs per sow (PSY) has increased from 24 to over 26, with some leading enterprises nearing 29, suggesting improved production efficiency [1] - The mid-term outlook indicates that the supply of live pigs will remain ample, with an expected increase in slaughter volume in the second half of the year, unless there is a significant rise in pork consumption [1] Policy Measures - On July 23, the Ministry of Agriculture and Rural Affairs proposed several measures for the development of the pig industry, focusing on strict implementation of capacity control, reasonable culling of breeding sows, and limiting new production capacity [1] - Long-term improvements in market supply-demand relationships and price stabilization are anticipated if the breeding sow inventory is reduced to 39.5 million heads [1]

Core Viewpoint - The Chinese government is implementing comprehensive regulation to reduce the breeding sow population by approximately 1 million heads to stabilize the pig supply and prevent price volatility in the pork market [1][2][4]. Industry Overview - The current pig production capacity in China is deemed excessively high, leading to a significant decline in pork prices, with prices dropping to 13.77 yuan per kilogram as of August 10, marking a 13.9% decrease since the beginning of the year [1]. - The reduction in breeding sows is expected to impact pig supply significantly in the coming months, with effects anticipated to materialize in about 10 months due to the natural growth cycle of pigs [1]. Policy and Regulatory Actions - Multiple policies have been introduced throughout the year to encourage the reduction of breeding sows, control secondary fattening, and lower the average weight of pigs at slaughter [2]. - A meeting held on July 23 emphasized the need for strict implementation of capacity control measures and the rational elimination of breeding sows [2]. Company Actions - Major companies like Muyuan Foods and New Hope have begun to implement measures to reduce their breeding sow populations and control the weight of pigs being sold [3]. - Muyuan Foods plans to reduce its breeding sow population by an additional 130,000 heads by the end of the year, while also lowering the average weight of pigs at slaughter [3]. - New Hope has restricted sales to slaughterhouses only, ceasing sales to secondary fattening customers [3]. Market Implications - Analysts suggest that the current focus on reducing breeding sow numbers aims to stabilize prices and alleviate debt pressures faced by many pig farming companies, which have high asset-liability ratios [4]. - The expectation is that the supply of pigs will increase in the latter half of the year, leading to potential short-term price pressures [3][4]. Related Company Performance - Dekang Agriculture reported sales of 780,200 pigs in July 2025, with a revenue of 1.427 billion yuan, indicating a slight decrease in average selling price [5]. - COFCO Joycome announced a total of 2.898 million pigs sold in the current year, with a significant portion of revenue coming from fresh pork sales [6]. - WH Group's projected core net profits for 2025 and 2026 are expected to show low double-digit growth, reflecting market expectations [6].

Economic Indicators - In July, China's CPI increased by 0.4% month-on-month, reversing a 0.1% decline from the previous month, and the year-on-year core CPI rose by 0.8%, marking the highest increase since March 2024 [3] - The PPI in July decreased by 0.2% month-on-month, but the decline was narrowed by 0.2 percentage points compared to the previous month, marking the first contraction since March [3] Agricultural Sector - The Ministry of Agriculture and Rural Affairs reported that China's pork production and consumption account for about 60% of total meat consumption, and measures will be taken to adjust the breeding of approximately 1 million sows to prevent price volatility [3] Small and Medium Enterprises - The China Small and Medium Enterprises Development Index (SMEDI) for July remained stable at 89.0, with significant increases in sectors such as construction, transportation, real estate, and information technology [3] Trade and Tariffs - The U.S. trade-weighted average tariff rate has risen to 20.11%, significantly higher than the 2.44% at the beginning of the year, indicating a substantial increase in trade barriers [5] - The World Trade Organization has downgraded the global goods trade growth forecast for 2026 from 2.5% to 1.8%, citing recent tariff adjustments as a negative influence on global trade prospects [5] International Relations - European leaders emphasized that any diplomatic solution regarding the Ukraine crisis must protect the significant security interests of Europe and Ukraine [5] - Discussions are ongoing between Qatar and the U.S. regarding a comprehensive ceasefire agreement for the Gaza conflict, expected to be submitted for discussion soon [5]

Core Insights - China's pork production and consumption account for approximately 60% of the total meat market, indicating the significance of the pork industry in the country's agricultural sector [1] - The Ministry of Agriculture and Rural Affairs has announced a comprehensive adjustment of pig production capacity, aiming to reduce the breeding sow population by about 1 million to prevent extreme fluctuations in production and prices [1] Production and Inventory - As of the end of June, the national pig inventory stood at 424 million heads, reflecting a 2.2% increase [1] - The breeding sow inventory reached 40.43 million heads, which is 103.7% of the normal retention level, nearing the upper limit of reasonable production capacity [1] - The inventory of pigs over five months old and the number of newborn piglets in the first half of the year are at historical highs, suggesting a significant increase in pig slaughter in the second half of the year and after the Spring Festival next year [1] Market Outlook - Expert Zhu Zengyong from the Ministry of Agriculture and Rural Affairs warns that without timely adjustments, there could be a risk of losses in pig farming, especially after the Spring Festival next year, due to potential oversupply during peak consumption seasons [1]

Report Summary 1. Report Industry Investment Rating No investment rating information is provided in the report. 2. Core Viewpoints - Short - term pig prices are dominated by the slaughter rhythm. Currently, the slaughter rhythm shows signs of slowing down, but the slaughter volume remains high, suppressing pig prices. Attention should be paid to whether this week's slaughter rhythm conforms to the general end - of - month and beginning - of - month slaughter situation. [2] - The capacity policy has a more obvious actual supporting effect on forward contracts due to the long breeding cycle. [2] 3. Summary by Relevant Catalog 3.1 Futures Market - The closing price of the main futures contract for live pigs is 14,075 yuan/ton, a decrease of 75 yuan; the main contract position is 53,049 lots, a decrease of 1,758 lots; the number of warehouse receipts is 0 lots, a decrease of 205 lots; the net long position of the top 20 futures is - 25,908 lots, an increase of 649 lots. The main contract of live pigs closed down 0.49% on Wednesday. [2] 3.2 Spot Market - The spot prices of live pigs in Henan Zhumadian, Guangdong Yunfu remained unchanged at 13,800 yuan/ton and 15,500 yuan/ton respectively, while the price in Jilin Siping decreased by 100 yuan/ton to 13,500 yuan/ton. The main basis of live pigs is - 275 yuan/ton, an increase of 75 yuan. [2] 3.3 Upstream Situation - The monthly live pig inventory is 42,4470,000 heads, an increase of 7160,000 heads; the inventory of breeding sows is 4,0420,000 heads, an increase of 40,000 heads. The CPI year - on - year is 0.1%, an increase of 0.2 percentage points. The spot price of soybean meal in Zhangjiagang is 2,890 yuan/ton, an increase of 40 yuan; the spot price of corn is 2,409.41 yuan/ton, an increase of 0.19 yuan; the DCE pig feed cost index is 940.02, an increase of 5.27. The monthly output of feed is 27,621,000 tons, an increase of 981,000 tons. The price of binary breeding sows is 1,638 yuan/head, unchanged. The breeding profit of purchased piglets is - 71.39 yuan/head, a decrease of 52.73 yuan; the breeding profit of self - bred and self - raised live pigs is 62.16 yuan/head, a decrease of 28.73 yuan. The monthly import volume of pork is 90,000 tons, unchanged. The average price of white - striped chickens in the main producing areas is 13.7 yuan/kg, an increase of 0.3 yuan. [2] 3.4 Downstream Situation - The monthly slaughter volume of designated live pig slaughtering enterprises is 3,2160,000 heads, an increase of 1390,000 heads. The monthly catering revenue in the total retail sales of social consumer goods is 470.76 billion yuan, an increase of 12.94 billion yuan. [2] 3.5 Industry News - On July 30, 2025, the daily national live pig slaughter volume of key breeding enterprises was 266,710 heads, a decrease of 2.98% from the previous day. Generally, the slaughter rhythm of the breeding end slows down at the end and beginning of the month. On July 30, the breeding end showed signs of reducing the volume, but the slaughter volume was still high. [2] 3.6 Policy Information - On July 23, the Ministry of Agriculture and Rural Affairs held a symposium, pointing out that it is necessary to strictly implement capacity regulation measures, reasonably cull breeding sows, appropriately reduce the inventory of breeding sows, reduce secondary fattening, control the slaughter weight of fat pigs, and strictly control new production capacity. [2] 3.7 Demand Side - The price of white - striped pigs has decreased, and part of the demand has recovered. The operating rate of slaughterhouses has increased slightly, but high temperatures still suppress people's willingness to buy pork. [2]

Investment Rating - The industry investment rating is maintained as "Increase" [6] Core Viewpoints - The agricultural sector outperformed the market by 1.93 percentage points during the week of July 21-25, 2025, with the index closing at 2,855.04, reflecting a weekly increase of 3.62% [1][15] - The pig farming sector is experiencing a decline in prices, with the average price of pigs at 14.15 yuan/kg, down 0.84% week-on-week and down 26.15% year-on-year [2] - The report emphasizes the importance of cost control for listed pig farming companies to navigate the pig cycle effectively [4] Summary by Sections 1. Market Review - The agricultural sector's index increased by 3.62%, ranking 9th among 31 sectors [1][15] - The breeding sector showed the best performance with a 5.27% increase, followed by planting, fishery, feed, agricultural product processing, and animal health sectors [17] 2. Industry Dynamics 2.1 Pig Farming - The profit from self-breeding pigs is 62.16 yuan/head, down 28.73 yuan/head week-on-week, while the profit from purchased piglets is -71.39 yuan/head, down 52.73 yuan/head [2] 2.2 Poultry - Chicken chick prices have rebounded, with an average price of 1.93 yuan/chick, up 40.88% week-on-week, and white feather chicken prices at 6.70 yuan/kg, up 4.69% [3] 2.3 Agricultural Products - Wheat and rice prices have increased, with wheat at 2,444.56 yuan/ton (up 0.20%) and rice at 2,912.00 yuan/ton (up 0.69%), while soybean meal prices have decreased to 2,964.00 yuan/ton (down 0.07%) [3] 3. Investment Recommendations - The report suggests focusing on the pig farming sector, particularly companies with strong cost control such as Muyuan Foods, Wens Foodstuff Group, and others [4] - For poultry, it recommends looking at integrated industry leaders like Shennong Development and Lihua Stock [4] - In the feed sector, it highlights Haida Group and Hefeng Stock as key players benefiting from the recovery in livestock inventory [4] - For agricultural products, it suggests monitoring Suqian Agricultural Development and Beidahuang [4]