Report Summary 1. Report Industry Investment Rating - There is no information provided on the report's industry investment rating in the given content. 2. Core View of the Report - The trend strength is -1, indicating a relatively bearish stance, with -2 being the most bearish and 2 being the most bullish [2]. - In August, the planned出栏 volume of group farms increased, small - scale farmers had passive backlogs, demand growth was limited, large - scale farms' efforts to reduce supply and support prices were ineffective, daily trading was poor, and it was difficult to absorb market supply. The supply pressure in the near - term was difficult to reverse, and the priority of the production - capacity cycle was higher than that of the inventory cycle. It is recommended to enter a 11 - 1 reverse spread trade. The state reserve purchase policy has been implemented, and during the passive inventory accumulation phase, supply pressure usually requires multiple rounds of state reserve purchases to be digested. The September contract is still at a premium to the warehouse - receipt cost, and the industry's willingness to deliver has increased, so the premium - collection market continues. The sentiment for purchasing piglets has declined, and the price decline has accelerated, corresponding to a decrease in the cost of pigs to be slaughtered in March. Attention should be paid to the downward - moving driver of the far - end price center, and stop - loss and take - profit should be noted. The short - term support level for the LH2509 contract is 13,000 yuan/ton, and the pressure level is 14,000 yuan/ton [3]. 3. Summary by Relevant Catalogs 3.1 Fundamental Tracking - **Spot Prices**: The Henan spot price is 13,780 yuan/ton with a year - on - year change of 0; the Sichuan spot price is 13,350 yuan/ton with a year - on - year decrease of 100; the Guangdong spot price is 14,790 yuan/ton with a year - on - year decrease of 150 [1]. - **Futures Prices**: The price of the 'pig2509' contract is 13,300 yuan/ton with a year - on - year decrease of 145; the 'pig2511' contract is 13,590 yuan/ton with a year - on - year decrease of 155; the 'pig2601' contract is 13,940 yuan/ton with a year - on - year decrease of 140 [1]. - **Trading Volume and Open Interest**: The trading volume of the 'pig2509' contract is 2,887 lots, a decrease of 1,339 from the previous day, and the open interest is 4,118 lots, a decrease of 1,746 from the previous day. The trading volume of the 'pig2511' contract is 30,542 lots, an increase of 4,380 from the previous day, and the open interest is 74,963 lots, an increase of 3,370 from the previous day. The trading volume of the 'pig2601' contract is 13,435 lots, an increase of 2,826 from the previous day, and the open interest is 48,133 lots, an increase of 582 from the previous day [1]. - **Basis and Spreads**: The basis of the 'pig2509' contract is 480 yuan/ton with a year - on - year increase of 145; the 'pig2511' contract basis is 190 yuan/ton with a year - on - year increase of 155; the 'pig2601' contract basis is - 160 yuan/ton with a year - on - year increase of 140. The 9 - 11 spread of pigs is - 290 yuan/ton with a year - on - year increase of 10 [1].

Group 1 - The core viewpoint of the article highlights a slight recovery in the breeding capacity of sows in the second quarter, with a total stock of 40.43 million heads by the end of June, reflecting a 0.1% increase compared to the previous month, nearing the levels expected by the end of Q2 2024 [1] - In terms of pig supply, the total output expected by Q2 2025 is 171.43 million heads, which is a year-on-year increase of 1.2%, with an average meat yield per head of 82.72 kg, up by 0.46 kg from the previous period [1] - The average price of commercial pigs dropped to 14.57 yuan/kg in June, a decrease of 20.6% year-on-year, while the price of piglets fell by 14.5% year-on-year, leading to a narrowing of average profits for large-scale farms to 7 yuan per head, with smallholders facing a loss of 6 yuan per head [1] Group 2 - The breeding ETF (159865) tracks the China Securities Livestock Index (930707), which selects listed companies involved in livestock feed, breeding, vaccines, and veterinary drugs to reflect the overall performance of the livestock industry [1] - The index comprehensively covers the upstream and downstream industries of livestock, effectively representing the overall development status of the sector [1] - Investors without stock accounts can consider the Guotai China Securities Livestock Breeding ETF Connect A (012724) and Connect C (012725) [1]

Report Summary 1. Report Industry Investment Rating No information provided. 2. Core Viewpoints - The 'year-on-year growth' of the current data has limited practical significance, and the market should focus on the relative strength between the current supply increase and the increase already reflected in the futures market [7]. - The current pig price is in the second half of the small cycle of passive capacity reduction due to diseases, and active/passive capacity reduction has not yet started [10]. - The most likely way to reduce capacity this year is passive capacity reduction driven by diseases, but large - cycle market trends still await active capacity reduction driven by low prices [12]. - The main trading logic of live - hog futures this year is the bearish logic of continuous supply recovery. After the bearish expectations are basically fulfilled, it trades the basis repair logic under different drivers [13]. 3. Summary by Directory 3.1 'Year - on - Year Growth' Effective Significance Is Insufficient - Due to capacity adjustments in 2023 - 2024, the year - on - year growth in 2025 supply was expected and already reflected in the futures market. Comparing 2025 data with 2023 shows that although the number of live - hogs in the first quarter of 2025 was higher than in 2024 but lower than in 2023, the increase in pork output was due to higher slaughter weights [7][8]. - Comparing the first half of 2025 with the same period in 2024 and 2023, the decline in the number of live - hog inventories in the second quarter of 2025 narrowed compared to 2023, and the year - on - year growth rate of live - hog slaughter in the first half of the year increased compared to the first quarter, indicating a continuous recovery in inventory. However, the contribution of weight to pork output in the second quarter weakened compared to the first quarter, and overall supply pressure still exists [8][9]. 3.2 Pig Capacity Cycle Issues and Thoughts 3.2.1 Current Stage of the Pig Capacity Cycle - As of the end of the second quarter, the number of breeding sows increased quarter - on - quarter. The current pig price is in the second half of the small cycle of passive capacity reduction due to diseases, and active/passive capacity reduction has not yet started [10]. 3.2.2 How to Achieve Capacity Reduction - There are three ways to reduce capacity: active capacity reduction driven by low prices (currently ineffective as pigs and piglets are profitable); passive capacity reduction caused by diseases (need to pay attention to winter disease prevention at the end of the year); and forced capacity reduction driven by environmental protection policies (the most likely way currently, which will promote large - scale development) [11]. 3.2.3 Main Trading Logic of Live - Hog Futures - The main trading logic this year is the bearish logic of continuous supply recovery. After the bearish expectations are fulfilled, it trades the basis repair logic. In the long - term, maintain a short - selling strategy unless the number of newborn piglets decreases; in the medium - term, it may operate in a wide range around the expected support and pressure of spot pig prices; in the short - term, it is trading the repair of the futures discount driven by the weight - reduction expectation [13].