Summary of Conference Call on Swine Industry Trends Industry Overview - The conference call primarily discusses the swine industry in China, focusing on the trends in pig prices and production dynamics for the second half of 2025 [1][2][3]. Key Points and Arguments 1. **Current Slaughter and Weight Trends** - National slaughter volume has decreased from 460,000 to 410,000 heads in early June, with average weights maintained at 126-128 kg [2][3]. - A slight reduction in slaughter and consumption is expected in June, estimated at 3%-4% [1][3]. 2. **Price Expectations** - The price of pigs is anticipated to remain weak in June, with projections indicating fluctuations around 7-8 yuan per kg [1][7]. - If prices drop below 7 yuan per kg, large producers are likely to enter the market aggressively [1][4]. 3. **Impact of Policy Recommendations** - The National Development and Reform Commission (NDRC) has suggested reducing pig weights and limiting sow production, but the immediate impact on prices is expected to be limited [3][5]. - Despite recommendations, many producers are reluctant to lower weights due to current profitability [3][5]. 4. **Future Market Dynamics** - A potential surge in secondary fattening is expected around July-August 2025, driven by profit motives and historical trends [5][6]. - The influence of large farming groups on northern pig prices is increasing, which may stabilize price fluctuations [7]. 5. **Cost Pressures** - Rising feed costs due to stable corn prices and poor wheat harvests are anticipated to exert pressure on the swine industry [11][12]. - The cost of raising pigs is expected to increase in the latter half of the year, influenced by raw material prices [12]. 6. **Consumer Behavior and Market Demand** - Mid-range consumer demand appears to be better than expected, with a 35% increase in slaughter volume from January to May attributed to various factors including the shift from frozen to fresh products [10][11]. - The impact of seasonal factors, such as weather and agricultural cycles, is also noted as influencing market dynamics [2][13]. Additional Important Insights - The high prices of piglets are primarily due to pricing strategies and significant deliveries in the first quarter, with expectations of a price drop post-June [8]. - The overall production efficiency in the swine industry has reached a plateau, indicating that future competition will focus more on pricing and volume rather than efficiency improvements [10]. - The execution of policies regarding secondary fattening is inconsistent, with market prices being the primary driver for producer decisions [4][14]. This summary encapsulates the critical insights and projections regarding the swine industry as discussed in the conference call, highlighting the interplay between market dynamics, policy impacts, and cost pressures.

Investment Rating - The report maintains a strong buy rating for Muyuan Foods and Wens Foodstuffs, highlighting their cost advantages and strong performance capabilities [3][58]. Core Insights - The pig farming industry is experiencing significant overselling, with seasonal price weakness in pig prices, but overall performance is better than market expectations. Factors such as frozen product inventory and secondary fattening still have room for improvement, indicating that the bottom of pig prices remains supported [1][58]. - In March 2025, the total number of pigs sold by 15 listed pig companies reached 17.69 million, a year-on-year increase of 40%, marking a historical high for monthly sales [40][58]. - The report emphasizes that the supply of breeding sows is expected to grow slowly in 2024, leading to limited growth in pig supply in 2025. The cost variance among different farming entities remains significant, allowing high-quality pig companies to achieve considerable profits and continue to repair their balance sheets [58]. Summary by Sections Section 1: Profitability and Production Capacity - Pig prices continue to be weak, while piglet prices remain strong. In March 2025, the average price of live pigs was 14.6 yuan/kg, showing a slight decrease year-on-year and month-on-month. The price of piglets was 610 yuan/head, reflecting a year-on-year increase [11][15]. - The profitability of pig farming continues to narrow, with the average profit for self-bred pigs at 42.4 yuan/head, down 39% month-on-month. The number of breeding sows decreased by 1.0% quarter-on-quarter [15][16]. - Sample companies showed significant overselling in March, with actual sales exceeding planned sales by 6.8%. The frozen product inventory has increased seasonally, indicating a rise in storage willingness among slaughter enterprises [23][58]. Section 2: Sales Growth and Piglet Volume - The total number of pigs sold by listed companies in March 2025 was 17.69 million, with a notable increase in piglet sales, which reached 2.62 million, a year-on-year increase of 196% [40][41]. - The average weight of pigs sold in March was 124 kg, reflecting a slight increase year-on-year and month-on-month, driven by the narrowing price gap [55][58]. Section 3: Investment Recommendations - The report suggests that the pig farming industry is expected to maintain support at the bottom price level, with a focus on companies with clear cost advantages and strong performance capabilities. The recommended companies include Muyuan Foods and Wens Foodstuffs, with additional attention to Shennong Group and Dongrui Co [58].