Supply Analysis - The official breeding sow inventory in April was 40.38 million heads, a year-on-year increase of 1.3%, with little monthly variation in the first half of the year [1] - In the first half of the year, piglet sales profits were good and feed costs were low, leading to a gradual increase in monthly piglet supply in the second quarter [1] - Breeding profits have declined to near breakeven, with the price difference for standard pigs expanding, prompting secondary fattening and group sales, resulting in a steady release of production capacity [1] Demand Analysis - Slaughter volumes in March and April significantly increased compared to the beginning of the year and the same period last year, with a year-on-year increase of about 8% in officially designated slaughter volumes, indicating a recovery in demand [1] - The national reserve's rotation and storage in the first half of the year provided support for slaughter enterprises [1] - High temperatures in July and August may suppress demand, while the peak demand season in the fourth quarter and domestic macroeconomic recovery may support pig prices [1] Profit Analysis - Breeding profits reached a high point in the second quarter before declining, but profits remain positive [1] - Profit changes are influenced by rising corn prices and a downward shift in spot prices, with limited downward space for breeding profits despite potential corn price increases [1] Basis Analysis - The market supply is loose, with futures fluctuating around cost lines, and near-month contracts significantly discounting spot prices [1] - Supply pressure has shifted, causing spot prices to decline less than expected, with contracts for March and May driving futures prices up [1] - Long-term contract basis fluctuates between 800 and 1300, with strong market expectations and slow declines in spot prices [1] Investment Recommendations - Overall inventory increases, weight reduction expectations, and fluctuations in secondary fattening are expected to extend the downward cycle of live pigs [1] - Inventory increases in July and August may slow down, while the growth rate of inventory in September may accelerate, maintaining a loose supply pattern [1] - It is recommended to short the September and November contracts based on basis adjustments [1]