Core Viewpoint - The continuous decline in pork prices in China is causing significant losses for pig farmers, despite benefiting consumers with lower prices [1][3]. Market Situation - Pork prices have reached near historical lows in various regions, with prices in some markets dropping to around 10 yuan per jin, which is lower than the prices of vegetables [3]. - The average price of live pigs has decreased from over 7 yuan per jin to around 5 yuan per jin, marking the lowest prices in years [3]. - According to the Ministry of Agriculture, the price of piglets is 26.2 yuan per kilogram, down 30% year-on-year, while the price of pork is 22 yuan per kilogram, down 16.5% year-on-year [3]. Factors Behind Price Decline - High supply of pigs is a primary factor, with production efficiency having improved significantly post-African swine fever, leading to increased output [9]. - Seasonal demand fluctuations contribute to the price drop, as the market typically sees reduced pork consumption after the Lunar New Year [10]. - Market sentiment is low, prompting farmers to accelerate the sale of pigs to alleviate financial pressure, further increasing supply and driving prices down [10][11]. Industry Response - Experts suggest that the industry should focus on cost reduction strategies, such as optimizing feed formulations and improving operational efficiency [14]. - The government has initiated measures to stabilize the market, including the central reserve of frozen pork and enhanced monitoring of supply and demand dynamics [15].

1. Report Industry Investment Rating - Not provided in the report 2. Core View of the Report - The pig futures market continued to be weak this week, with the main contract price falling by more than 8% in a single week. The spot price also declined, and the pig price has been below the industry average cost line for nearly half a year. The supply side has a high inventory base and high slaughter weights, while the terminal consumption is in a seasonal off - season, making it difficult to support pig prices. The policy side released capacity control signals, and it is expected that the reasonable reserve target of breeding sows will be further reduced to 36.5 million, a reduction of 7.8% compared to the end of 2025. In the short term, the supply - strong and demand - weak situation has not changed, and the market may continue to oscillate at a low level [8][81]. 3. Summary by Directory 3.1. Market Review 3.1.1. Futures Price - Last week, the pig futures market continued to be weak and accelerated its decline. The main contract price hit new lows. As of March 20, the LH2605 contract was reported at 10,220 yuan/ton, with a weekly decline of more than 8% [5][13]. 3.1.2. Spot Price - Since 2026, the domestic pig market has continued to decline. As of March 20, the national average pig slaughter price dropped to 9.87 yuan/kg, a week - on - week decline of 0.16 yuan/kg and a year - on - year decline of more than 30%. The pig price has fallen below the industry's break - even line, and the breeding side is in a deep - loss range. The price of piglets and sows also declined, and the price of culled sows decreased by 1.17% week - on - week [19][22][29]. 3.1.3. Spread Situation - The futures and spot prices of pigs declined together this week. The basis was weak at a low level, and as of March 20, the pig basis was reported at - 350 yuan/ton. The spread between standard and fat pigs continued to narrow, reaching - 0.64 yuan/kg [33][36]. 3.2. Fundamental Analysis 3.2.1. Supply Side - **Breeding Sows Inventory**: As of the end of January 2026, the national inventory of breeding sows was 39.58 million, a slight month - on - month decrease of 0.08%. In February, the inventory of breeding sows in large - scale farms and small and medium - sized farms changed little [42]. - **Pig Inventory**: As of the end of January 2026, the national pig inventory was 429.02 million, a month - on - month decrease of 0.15%. In February, the inventory of commercial pigs in large - scale farms increased by 1.79% month - on - month, and that in small and medium - sized farms increased by 1.36% month - on - month. The inventory in March may continue to increase [48]. - **Pig Slaughter**: In February, the slaughter volume of commercial pigs in large - scale farms decreased by 12.95% month - on - month, while that in small and medium - sized farms increased by 2.85% month - on - month. The overall slaughter pressure in March is still high [57]. - **Average Slaughter Weight**: Last week, the average slaughter weight of三元 pigs increased slightly to 123.28 kg, a week - on - week increase of 0.11 kg [62]. 3.2.2. Demand Side - **Slaughtering Enterprises' Operating Rate**: Last week, the operating rate of slaughtering enterprises rebounded slightly to 30.45%, a week - on - week increase of 1.92% [66]. - **Frozen Product Storage Rate and Fresh Sales Rate**: Last week, the fresh sales rate of key slaughtering enterprises was 80.17%, a month - on - month decrease of 2.27%, and the frozen product storage rate was 18.72%, a month - on - month increase of 0.88% [71]. 3.2.3. Cost - Profit Situation - **Self - Breeding and Purchasing Piglets Profit and Loss**: As of March 20, the average loss per head in the self - breeding mode was 286.53 yuan, and that in the mode of purchasing piglets was 177.96 yuan [77]. - **Pig - Grain Ratio**: The current pig - grain ratio is 4.15, which is in the first - level early - warning range of excessive pig price decline. The industry is in a deep - loss state, and the elimination of inefficient production capacity is expected to accelerate [80]. 3.3. Market Outlook - In the short term, although the policy control signal has repaired the market's pessimistic sentiment, the current supply - strong and demand - weak fundamental pattern has not changed, and the market may continue to oscillate at a low level [8][81][82]. 3.4. Operation Strategy - **Single - Side**: In the short term, adopt a weak - oscillation strategy and pay attention to the slaughter rhythm; in the medium term, track the progress of production capacity reduction and layout opportunities for cycle reversal. - **Arbitrage**: None - **Options**: None [9][83]

Investment Rating - The industry investment rating is "Positive" (maintained) [1] Core Insights - The report highlights that pig prices continue to hit new lows without signs of a turning point, with cautious breeding and passive inventory accumulation reinforcing weakness in the market [3][4] - As of March 20, 2026, the national average price of live pigs dropped to 9.87 CNY/kg, continuing a downward trend [3][14] - The report indicates that the supply of pigs is abundant, with daily slaughter volumes significantly higher than the same period last year [14] Summary by Sections Weekly Observation - Pig prices remain at record lows, with a national average of 9.87 CNY/kg as of March 20, 2026, and high daily slaughter volumes [3][14] - The average weight of pigs at market is 128.62 kg, with significant weight differentiation between group farms and individual farmers [14] Market Performance (March 16-20) - The agricultural sector underperformed the market by 1.12 percentage points, with the agricultural index down 4.50% [7][36] - Notable stock performances include ST Jinggu (+6.04%), Zhongxing Junye (+4.51%), and Shennong Group (+1.13%) [36] Key News - The National Development and Reform Commission and the Ministry of Agriculture held a meeting with pig farming enterprises to analyze price trends and market regulation strategies [6][45] - The Ministry of Agriculture released a policy list for 2026 aimed at supporting agricultural producers [6][45] Price Tracking (March 16-20) - The average price of live pigs was 9.99 CNY/kg, down 0.09 CNY/kg from the previous week, while the average price of piglets was 23.12 CNY/kg, down 1.24 CNY/kg [8][47] - The report notes a decrease in profits for self-breeding and purchased piglets, with average profits of -297.68 CNY/head and -141.48 CNY/head, respectively [8][47] Supply and Demand Dynamics - The inventory rate of frozen products was 18.60%, indicating a slight passive accumulation trend [4][18] - The breeding sector remains cautious, with a breeding barn utilization rate of 28.9% as of March 10, 2026, still at a low level [4][21] Breeding Stock Trends - The number of breeding sows showed a marginal increase, with a month-on-month growth of 0.65% in January and 0.73% in February 2026 [5][30] - Piglet prices have rapidly declined, with a price of 294 CNY/head as of March 17, 2026, reflecting weak replenishment demand [5][30]

1. Report Industry Investment Rating No relevant content provided. 2. Core Viewpoints of the Report - The policy focus this week includes strengthened regulation of pig production capacity and the central bank's potential increased efforts to maintain the financial market [1][9]. 3. Summary by Relevant Catalogs 3.1 Policy Weekly Observation 3.1.1 This Week's Policy Highlights - Strengthened regulation of pig production capacity and the central bank may increase efforts to maintain the financial market [1][9]. 3.1.2 Specific Policy Review - **Trade Policy**: On March 16, 2026, China and the US held economic and trade consultations in Paris, France, and agreed to study the establishment of a cooperation mechanism. China opposes the US's imposition of unilateral tariffs and urges the US to completely cancel such restrictions. The two sides aim to promote the healthy, stable, and sustainable development of bilateral economic and trade relations [4][10]. - **Monetary Policy**: The Party Committee of the People's Bank of China held an enlarged meeting, emphasizing the firm maintenance of the stable operation of financial markets such as stocks, bonds, and foreign exchange. It will continue to implement a moderately loose monetary policy, use various policy tools to maintain liquidity, and study the establishment of a liquidity support mechanism for non - bank financial institutions in specific scenarios [4][10]. - **Agricultural Policy**: The National Development and Reform Commission and the Ministry of Agriculture and Rural Affairs held a symposium for pig - breeding enterprises. Due to factors such as the decline in post - festival consumer demand, pig prices have entered the first - level early - warning range of excessive decline. The state has started the purchase and storage of central frozen pork reserves and will continue to strengthen the comprehensive regulation of pig production capacity [4][10]. - **Macro - economic Policy**: Li Qiang chaired the 11th plenary meeting of the State Council, emphasizing the implementation of strategic deployments for economic and social development in 2026 and the "15th Five - Year Plan," including promoting the construction of a unified national market, developing new - generation intelligent manufacturing, and investing more in people and serving people's livelihoods [12]. - **Fiscal Policy**: The Ministry of Finance released the report on the implementation of China's fiscal policy in 2025, including supporting the construction of a strong domestic market, implementing a package of fiscal and financial policies to promote domestic demand, and improving the management of special bonds [12]. - **Industrial Policy**: The National Development and Reform Commission organized the application for national - level landmark major application scenario projects, and the Ministry of Commerce issued policies to promote travel service exports and expand inbound consumption. The National Development and Reform Commission also plans to accelerate the formulation of an action plan for the expansion and quality improvement of the service industry [12]. - **Financial Work**: The China Securities Regulatory Commission held a meeting to deploy key tasks for 2026, focusing on anti - corruption in key areas and strengthening the supervision of public power. Five departments, including the Ministry of Justice, solicited public opinions on the "Law of the People's Republic of China on Finance (Draft)" [14]. - **Real Estate Policy**: Nanjing issued policies to stabilize the real estate market, including supporting "help - selling" services, providing loan interest subsidies for "selling old and buying new" homebuyers, and adjusting the minimum down - payment ratio for commercial housing loans [14].

Report Overview - Report Name: "Supply Pressure Eases Slowly, Futures Violently Squeeze Premium - Guoxin Futures Live Pig Weekly Report" - Date: March 20, 2026 1. Report Industry Investment Rating - Not provided in the report 2. Core Viewpoints of the Report - In the past week, the live pig spot market fluctuated weakly, with the national average price of standard pigs falling below 10 yuan, but the decline rate slowed down. The futures market fell sharply, with the main lh2605 contract dropping 8.34% to close at 10,215 yuan/ton. The futures were weaker than the spot, strengthening the basis, but it remained in a negative basis state. The large futures decline was mainly due to the high premium on the futures and the slow easing of spot supply pressure, leading to a reshaping of the futures valuation [7]. - Recently, the slaughter volume has increased rapidly, but the improvement in fresh product sales is limited, and the frozen product inventory has risen continuously, indicating that there is some warehousing behavior at the slaughter end. Second - round fattening replenishment has appeared sporadically, and the utilization rate of pigsties has increased, but the average slaughter weight remains high, suggesting that the de - stocking of live inventories is still slow. Given the current low absolute price, there is no economic rationality for hoarding, and passive hoarding in the industry is unsustainable. In the later stage, the risk of concentrated selling in the industry under increasing capital pressure needs to be guarded against [7]. - In the long term, the off - season performance of piglet prices, continuous losses in fattening profits, and falling futures prices will further affect the enthusiasm for replenishment. Piglet profits will fall into the loss range again, which may force the acceleration of capacity reduction. Policy - wise, relevant national departments held an industry meeting on Thursday, re - clarifying the direction of capacity regulation [7]. - In general, before the average weight effectively decreases, avoid bottom - fishing thinking for near - term contracts, and mainly adopt the idea of short - selling on rebounds or selling out - of - the - money call options. For far - term contracts, patiently wait for the right - side long - allocation opportunity after the acceleration of capacity reduction. Medium - term contracts are easily affected by spot pressure and long - term capacity reduction trading, so both long and short positions should pay attention to the safety margin of entry [7]. 3. Summary by Relevant Catalog 1. Weekly Analysis and Outlook - Spot market: The national average price of standard pigs fell below 10 yuan, and the decline rate slowed down. Futures market: The main lh2605 contract dropped 8.34% to 10,215 yuan/ton. The futures were weaker than the spot, and the basis strengthened but remained negative. The large futures decline was due to high premium and slow supply pressure easing [7]. - Fundamental situation: Slaughter volume increased rapidly, fresh product sales improved little, and frozen product inventory rose. Second - round fattening replenishment appeared sporadically, pigsty utilization rate increased, but average slaughter weight was high, and live inventory de - stocking was slow. Passive hoarding was unsustainable, and there was a risk of concentrated selling [7]. - Long - term trend: Piglet prices were weak in the peak season, fattening profits were in continuous loss, and futures prices fell, affecting replenishment enthusiasm. Piglet profits may enter the loss range again, forcing capacity reduction [7]. - Policy: National departments held a meeting to clarify capacity regulation [7]. - Investment strategy: Near - term contracts: Avoid bottom - fishing, short - sell on rebounds or sell out - of - the - money call options. Far - term contracts: Wait for the right - side long - allocation opportunity after capacity reduction. Medium - term contracts: Pay attention to the safety margin of entry [7]. 64. Central Reserve Frozen Pork Operations - Price over - decline: At the national level, do not start temporary reserve purchases when the third - level over - decline warning is issued; start as appropriate when the second - level warning is issued; start when the first - level warning is issued. Local conditions refer to the national practice [65]. - Price over - rise: In the case of market cyclical fluctuations, start reserve releases when the second - level over - rise warning is issued; increase the release intensity when the first - level warning is issued. In special situations such as major animal epidemic risks, tolerate a higher price increase. After the first - level warning is issued, organize releases mainly during key periods. Provinces can determine their own reserve release start conditions, which should not be higher than the central conditions [65].

Core Viewpoint - The domestic pig prices have been continuously declining since the Spring Festival, reaching a seven-year low, with the current price at 10.29 yuan/kg, marking a year-to-date drop of nearly 15% [3][4]. Group 1: Price Trends - As of March 16, the price of live pigs has dropped to 10.29 yuan/kg, down 29.7% year-on-year from 14.63 yuan/kg and down 16.75% month-on-month [6]. - The pig futures market is also experiencing a downturn, with the main contract price hitting a historical low of 10,860 yuan, reflecting a pessimistic market outlook [6]. - The average loss per head for the self-breeding model has expanded to approximately 283 yuan, indicating a prolonged period of losses for the industry [6][7]. Group 2: Supply and Demand Dynamics - The decline in pig prices is attributed to an oversupply and weak demand, with the number of breeding sows remaining high at 39.61 million, slightly above the normal limit set by the Ministry of Agriculture [7]. - Post-Spring Festival, pork consumption has entered a traditional off-season, leading to a slowdown in sales, despite slaughterhouses attempting to lower purchase prices [7]. - Rising feed costs, particularly for soybean meal and corn, have added pressure on farmers, with soybean meal prices up 11.31% year-to-date and corn prices up 8.23% [7]. Group 3: Impact on Listed Companies - The ongoing low prices have negatively impacted the sales data of listed pig farming companies, with 19 companies reporting a total of 30.43 million pigs sold in January and February, a 9.9% increase year-on-year, but with declining sales revenue [9]. - Leading company Muyuan Foods reported a sales revenue drop of 11.93% and 23.98% for January and February, respectively, due to falling average selling prices [9][10]. - Other major players like Wens Foodstuffs and New Hope also experienced revenue declines, with Wens reporting its lowest revenue since 2025 [10]. Group 4: Future Outlook - The Ministry of Agriculture and the National Development and Reform Commission are taking measures to stabilize the market, including adjusting the breeding sow stock target down to 36.5 million, a decrease of about 7.9% [10]. - Analysts suggest that if capacity control measures are strictly implemented, along with the industry's forced reduction in production due to losses, the bottom of the current price cycle may be established in the second half of 2026 [10][11]. - However, short-term price recovery remains uncertain due to high average weights of market pigs and increased numbers of new piglets, which could pressure prices further in the first half of the year [11].

Investment Rating - The investment rating for the company is "Buy" (maintained) [1][6] Core Insights - The company reported a steady growth in the number of pigs sold in February, with a total of 297,400 pigs sold, representing a year-on-year increase of 24.06%. However, the average selling price decreased to 11.28 yuan per kilogram, down 23.9% year-on-year [6][7] - The company is focusing on cost control and high-quality development, with a projected total cost of 12 yuan per kilogram for pigs by December 2025. The company aims to improve production efficiency and reduce costs through digitalization and innovation [6][7] - The current low pig prices are expected to accelerate capacity reduction in the industry, which may benefit future prices as supply decreases [6][7] Summary by Relevant Sections Sales Performance - In February, the company sold 297,400 pigs, with a total sales revenue of 425 million yuan, reflecting a 4.9% decrease year-on-year. Cumulatively, from January to February, the company sold 701,800 pigs, achieving a revenue of 1.073 billion yuan, which is a 15.5% increase year-on-year [6][7] Financial Forecasts - The company's projected main revenue for 2024 is 6,078.25 million yuan, with a year-on-year growth of 50.43%. The net profit attributable to the parent company is expected to be 518.55 million yuan, with a significant year-on-year increase of 180.36% [3][7] - For 2025, the expected net profit is 31.32 million yuan, reflecting a decrease of 93.96% year-on-year, while for 2026, a net loss of 32.76 million yuan is anticipated [3][7] Cost Management - The company is expected to maintain a cost of approximately 13 yuan per kilogram for the entire year of 2025, with ongoing efforts to enhance production efficiency and reduce costs [6][7] - The company plans to stop new breeding projects and phase out inefficient breeding capacity to focus on high-quality development [6][7]

1. Report Industry Investment Rating No information about the report industry investment rating is provided in the document. 2. Core Viewpoints of the Report - The core contradiction in the pig market last week was the significant divergence between the behaviors and expectations of upstream and downstream players under the pattern of strong supply and weak demand. The upstream breeding end accelerated concentrated slaughter before the Spring Festival due to the general bearish sentiment towards the post - holiday market, leading to a continuous shift of post - holiday supply pressure. The downstream slaughter end faced the dilemma of the traditional off - season of terminal consumption, with low开工率 and weak ability to absorb supply, resulting in an imbalance between supply and demand and a weak pig price [1]. - The near - term trading logic includes dismal post - holiday pork demand, the post - holiday window period for frozen pork inventory, the continuous narrowing of the standard - fat price difference, and whether second - round fattening farmers will enter the market when the price of standard pigs falls after the holiday [3]. - The long - term trading logic involves the expected policy - led continuous reduction of reproductive sow capacity and the pre - advancement of farmers' replenishment behavior, which has driven the month - on - month increase in piglet prices [6]. 3. Summary by Relevant Catalogs 3.1 Core Contradiction and Strategy Suggestions 3.1.1 Core Contradiction - Upstream: Farmers accelerated concentrated slaughter before the Spring Festival due to bearish sentiment. Although the average weight of large - scale farms increased after the holiday, the overall slaughter enthusiasm remained high, and the supply of suitable - weight pigs was abundant. The enthusiasm of second - round fattening farmers for replenishment decreased after the holiday, and the utilization rate of pens declined, weakening the short - term support for pig prices [1]. - Downstream: The terminal consumption entered the traditional off - season. The开工率 of slaughter enterprises gradually recovered but remained at a low level, the daily slaughter volume decreased significantly compared with before the holiday, and the procurement was smooth. Slaughter enterprises faced high profit pressure, which hindered the increase of purchase prices and开工 rates, and they lacked the willingness to store large - scale frozen products [1]. 3.1.2 Speculative Strategy Suggestions - **Base - spread strategy**: The current pig base - spread is neutral, and it is recommended to continue to wait and see [9]. - **Calendar - spread strategy**: For the calendar - spread strategy, one can choose to go long on the 05 contract and short on the 07 contract [9]. 3.1.3 Industrial Customer Strategy Suggestions - **Trend judgment**: The pig price will fluctuate at a low level. The main contract will oscillate in the range of 11,000 - 12,500 [12]. - **Unilateral strategy**: For the main 05 contract of pigs, one can choose to sell the call option LH2605 - C - 12800 [12]. - **Risk management strategies for pig enterprises**: Different strategies are provided according to different scenarios, such as shorting pig futures to lock in profits, selling call options, buying put options, etc. [13] 3.2 Market Information 3.2.1 This Week's Main Information - **Positive information**: On March 3, the National Development and Reform Commission and the Ministry of Agriculture jointly convened a special meeting with 7 leading pig enterprises, proposing to further reduce the inventory of reproductive sows to about 36.5 million, a decrease of nearly 10% compared with the end of 2025. The annual production filing management for leading enterprises has been officially implemented. Muyuan Group has actively responded to capacity regulation, reducing the inventory of reproductive sows from 3.62 million in 2025 to 3.13 million in January this year. On March 4, 2026, Huachu Network announced a central reserve frozen pork rotation purchase and storage transaction of 10,000 tons [14]. - **Negative information**: As of March 5, the average weight of slaughtered pigs in the country rose to 128.15 kg, a week - on - week increase of 0.42 kg, and 5.38 kg higher than the same period in 2024. The proportion of large pigs over 150 kg increased to 4.37%, indicating that the problem of large - pig backlog has not been solved, and the actual supply pressure is greater. This week, the pig price continued to decline. As of March 6, the national average pig price fell to 10.29 - 10.56 yuan/kg, a week - on - week decline of 3.39% - 4.72% [14][15]. 3.2.2 Next Week's Main Information Pay attention to the inventory of reproductive sows, the average weight of slaughtered pigs, and the changes in the pig - grain ratio [16]. 3.3 Disk Interpretation 3.3.1 Price - Volume and Capital Interpretation This week, the main 05 contract of pigs opened at 11,485 yuan/ton at the beginning of the week and closed at 11,160 yuan/ton at the end of the week, a decrease of 325 points or 2.83%. The open interest was 173,000 contracts, an increase of 17,939 contracts compared with last week. The pig market is in a continuous bottom - exploring stage [18]. 3.3.2 Base - spread and Calendar - spread Structure Analysis - **Calendar - spread structure**: The pig calendar - spread structure is in a Contango structure. The main reason is that the pig demand this week was dismal, falling short of expectations, the spot price declined, and the overall inventory still needs long - term bottom - grinding and de - stocking. Whether the peak season can boost demand remains to be seen [20]. - **Base - spread structure**: As the second - round fattening pigs were gradually slaughtered, the market supply increased. Although the slaughter volume of the slaughter end increased, it had little impact compared with the increase in supply. The average weight of large - scale farms increased after a previous decline, and the base - spread of the near - month contract increased slightly [22]. 3.4 Valuation and Profit Analysis - **Profit tracking of the upstream and downstream of the industrial chain**: With the decline of the pig price this week, the pig breeding profit decreased, and the average profit per self - bred and self - raised pig continued to decline, resulting in losses. Due to farmers' optimism about the future pig price, the enhanced replenishment willingness in the early stage promoted the continuous rise of piglet prices, and the gross profit increased month - on - month compared with last week. In terms of second - round fattening, although the standard - fat price difference strengthened this week, it was still negative, and the demand for large pigs was better than that for standard pigs. Early second - round fattening farmers slaughtered and realized profits. In terms of slaughter, as the white - hair price difference weakened, the profit of slaughter enterprises decreased [24]. 3.5 This Week's Supply and Demand Situation 3.5.1 Supply - Side Situation - **Reproductive sows**: The inventory data of reproductive sows from Steel Union decreased slightly month - on - month but remained generally stable, and the elimination of reproductive sows was less than expected. The PSY level decreased by 0.2 month - on - month, and the average price of eliminated sows decreased month - on - month [29]. - **Pigs**: In 2025, the slaughter volume of large - scale enterprises remained at a high level, and the inventory was at a three - year high. This week, the average slaughter weight remained stable [32]. - **Piglets**: The piglet price was relatively low compared with the same period last year, showing a seasonal upward trend. This week, the gross profit of piglets recovered and was close to the break - even cost line [34]. - **Second - round fattening**: The standard - fat price difference strengthened this week, and the utilization rate of second - round fattening pens decreased [37]. - **Feed**: The prices of corn and soybean meal fluctuated, and the feed price remained stable this week [39]. 3.5.2 Demand - Side Situation - **Slaughter situation**: The current slaughter volume of slaughter enterprises is at a high level in recent years. The slaughter profit of pig slaughter enterprises has weakened, the cold - storage inventory has gradually increased, and the inventory demand has gradually started. Due to the strong willingness of farmers to hold back sales and support prices, the stocking willingness of slaughter enterprises has weakened. This week, the slaughter profit decreased month - on - month, and the average weight after slaughter did not change significantly [43]. - **Terminal situation**: The terminal consumption situation remained weak. The fresh - sales rate of slaughter enterprises was at the lowest level in the past five years seasonally, and the white - hair price difference was the worst in the same period [46]. 3.5.3 Import and Export Situation - **Import situation**: The import volume is at the lowest level in the same period in the past five years [52]. - **Export situation**: The export volume is at the highest level in the same period in the past five years [55]. 3.5.4 Cost - Profit Situation - The pig breeding profit decreased, and the pig - grain ratio is also at a certain level. The prices of corn and soybean meal fluctuated, and the cost of meat production also showed certain changes [58][60].

Summary of the Conference Call on Swine Industry Industry Overview - The swine industry is expected to see tighter production capacity control in 2026, but the reduction in capacity for 2025 is limited, with the breeding sow population remaining stable overall. The supply side does not have a basis for "significantly tight" conditions in 2026 [2][4] - The average PSY (Pigs per Sow per Year) continues to improve, which will directly increase the supply of market-ready pigs. Overall supply in 2026 is likely to exceed that of 2025, putting pressure on price levels [2][4] Key Insights and Arguments - As of the end of 2025 and early 2026, there is no clear reduction in the breeding sow population due to losses in market pigs, while piglets still yield profits. This limits the motivation for sow reduction [2][3] - The price of pigs in 2026 is expected to operate near cost lines. The key factor for more significant sow reduction will depend on the profitability of piglets. A notable decline in piglet profits in the first half of 2026 could drive more substantial capacity reduction [2][3][7] - After the Spring Festival, pig prices have continued to weaken, with both self-breeding and purchased piglet fattening operations currently at a loss. Short-term stability in piglet prices is expected, but there is still potential for seasonal increases in the first half of 2026 [2][3][11] Important but Overlooked Content - The average PSY is reported at 23.7, an increase of 0.6 from 2024, indicating that production efficiency is a key variable for supply expansion. Continuous improvement in PSY will likely lead to higher market-ready pig supplies in 2026 [4][10] - The seasonal price trends for piglets indicate that prices typically bottom out around October each year, followed by a gradual increase. The current price for piglets is around 350-360 yuan per head, which is profitable compared to the average weaning cost of 280-290 yuan per head [8][9] - The market is expected to experience high supply and price fluctuations around cost lines in 2026, with the core variables being piglet profits and policy control measures [16][17] Conclusion - The swine industry is facing a complex landscape in 2026, characterized by high supply and price pressures. The ability to manage production capacity effectively will be crucial, with profitability in the piglet segment being a significant driver for any potential capacity reductions. The overall market sentiment remains cautious, with expectations of limited recovery in 2027 [17][18]

1. Report Industry Investment Rating - Not provided in the report 2. Core Views of the Report - The core contradiction in the pig market last week was the significant divergence between the behaviors and expectations of upstream and downstream players under the pattern of strong supply and weak demand. The oversupply and weak demand led to a weak pig price and a new stage - low [1]. - The near - term trading logic includes dismal post - festival pork demand, the post - festival window period for frozen pork inventory, and whether secondary fatteners will enter the market when the price of standard pigs drops [3]. - The long - term trading logic involves the policy - led expectation of continuous capacity reduction of breeding sows and the early replenishment behavior of farmers driving up the piglet price [6]. 3. Summary by Directory 3.1 Core Contradiction and Strategy Suggestion 3.1.1 Core Contradiction - Upstream: Farmers accelerated concentrated slaughter before the Spring Festival due to bearish post - festival market expectations, resulting in a continuous shift of post - festival supply pressure. Although the average slaughter weight of large - scale farms increased, the overall enthusiasm for slaughter remained high, and the supply of suitable - weight pigs was abundant. Secondary fatteners' enthusiasm for replenishment declined after the festival, and the utilization rate of pens decreased, weakening the short - term support for pig prices [1]. - Downstream: The terminal consumption entered the traditional off - season. Although the slaughtering rate gradually recovered after the festival, it was still at a low level. The daily slaughter volume of sample enterprises decreased significantly compared with that before the festival. Slaughtering enterprises faced great profit pressure, which hindered price increases for procurement and the improvement of the slaughtering rate. They also lacked the willingness for large - scale inventory [1]. 3.1.2 Speculative Strategy Suggestions - **Base - spread strategy**: The current pig base - spread is neutral, so continue to wait and see [9]. - **Calendar - spread strategy**: Choose to go long on the 05 contract and short on the 07 contract [9]. 3.1.3 Industry Customer Strategy Suggestions - **Trend judgment**: The pig price will fluctuate at a low level [12]. - **Price range**: The main contract will fluctuate between 11,500 - 12,500 [12]. - **Unilateral strategy**: For the main 05 contract of pigs, choose to buy the call option LH2605 - C - 11500 [12]. - **Risk management strategies for pig enterprises**: Different strategies are provided for inventory management and procurement management, including shorting futures, selling call options, buying put options, etc., with corresponding recommended ratios and entry intervals [13]. 3.2 Market Information 3.2.1 This Week's Main Information - **Positive information**: On February 26, the Ministry of Agriculture and Rural Affairs officially released the 2026 pig production capacity regulation plan, aiming to stabilize market expectations. As of February 27, the average loss per self - bred and self - raised pig in the industry increased to 159.65 yuan per head, with a significantly deeper loss than before the festival [14]. - **Negative information**: As of February 10, the utilization rate of secondary fattening pens dropped to 19.5% (a decrease of 10.8 percentage points compared with the end of January), and the proportion of secondary fattening in actual sales was only 0.54%. In January 2026, the national inventory of breeding sows increased by 0.65% month - on - month, and the PSY reached 11.35, indicating a loose supply pattern in 2026 [14]. 3.2.2 Next Week's Main Information - Pay attention to the frozen pork inventory and the average slaughter weight of pigs [15] 3.3 Disk Interpretation 3.3.1 Price, Volume, and Capital Interpretation - The main 05 contract of pigs opened at 11,500 yuan/ton at the beginning of the week and closed at 11,485 yuan/ton at the end of the week, a decrease of 15 points or - 0.13%. The open interest was 155,000 contracts, an increase of 18,595 contracts compared with last week. The disk was in a volatile stage with little change [15]. 3.3.2 Base - spread and Calendar - spread Structure Analysis - **Calendar - spread structure**: The pig calendar - spread structure is in a Contango structure because of the dismal pig demand this week, the decline in spot prices, and the need for long - term inventory reduction. Whether the peak season can boost demand remains to be seen [17]. - **Base - spread structure**: As secondary fattening pigs were slaughtered one after another, the market supply increased. Although the slaughter volume of the slaughtering end increased, it had little impact compared with the increase in supply. The average slaughter weight of large enterprises first decreased and then increased, and the base - spread of the near - month contract rebounded slightly [19]. 3.4 Valuation and Profit Analysis - **Upstream and downstream profits in the industrial chain**: As the pig price fell this week, the pig farming profit decreased, and self - bred and self - raised pigs suffered losses. Due to farmers' optimism about the future pig price, the increased pre - festival replenishment willingness pushed up the piglet price, and the gross profit increased month - on - month. In terms of secondary fattening, although the spread between standard and fat pigs strengthened, it was still negative, and early secondary fattening farmers slaughtered and made a profit. In terms of slaughtering, as the spread between white and hair pigs weakened, the profit of slaughtering enterprises decreased [21]. 3.5 This Week's Supply and Demand Situation 3.5.1 Supply - side Situation - **Breeding sows**: The inventory of breeding sows increased month - on - month, and the elimination of breeding sows was less than expected. The PSY level decreased month - on - month, and the average price of culled sows decreased month - on - month [26]. - **Pigs**: In 2025, the slaughter volume of large - scale enterprises remained high, and the inventory was at a three - year high. This week, the average slaughter weight remained stable [29]. - **Piglets**: The piglet price was relatively low compared with the same period last year, showing a seasonal upward trend. This week, the gross profit of piglets recovered and was close to the break - even cost line [31]. - **Secondary fattening**: The spread between standard and fat pigs strengthened this week, and the utilization rate of secondary fattening pens decreased [34]. - **Feed**: The prices of corn and soybean meal fluctuated, and the feed price remained stable this week [36]. 3.5.2 Demand - side Situation - **Slaughtering**: The current slaughter volume of slaughtering enterprises was at a multi - year high. The slaughtering gross profit of pig slaughtering enterprises weakened, the cold - storage inventory gradually increased, and the inventory demand gradually started. Due to farmers' strong willingness to hold back sales and support prices, the procurement willingness of slaughtering enterprises decreased. This week, the slaughtering profit decreased month - on - month, and the average weight after slaughter did not change significantly [39]. - **Terminal**: The terminal consumption remained weak. The fresh - sales rate of slaughtering enterprises was at the lowest level in the past five years, and the spread between white and hair pigs was the worst in the same period [42]. 3.5.3 Import and Export Situation - **Import**: The import volume was at the lowest level in the same period in the past five years [48]. - **Export**: The export volume was at the highest level in the same period in the past five years [51]. 3.5.4 Cost and Profit Situation - The pig farming profit decreased, and the pig - to - grain ratio was monitored. The prices of corn and soybean meal fluctuated, and the cost of secondary fattening was analyzed [54][56].