Group 1: Corn Market Overview - In 2025, domestic corn prices fell to low levels due to high yields and declining costs, with the main futures contract switching from 2603 to 2605 in February 2026 [1] - As of February 6, the national grain sales progress reached 61%, 4 percentage points faster year-on-year, with Northeast and North China regions showing even higher sales progress [1] - The increase in supply from farmers and grain holders has led to a noticeable rise in port arrivals, from 500,000 tons per week to 800,000 tons per week [1] Group 2: Deep Processing Industry - The starch industry operates at a capacity rate of 57.79%, higher than last year's 53.3%, but overall operational levels remain low [1] - Since 2025, high corn prices have exacerbated losses in the starch and alcohol industries, limiting the potential for increased operational rates [1] Group 3: Feed Demand and Pig Inventory - The inventory of breeding sows decreased to 39.61 million heads by the end of December 2025, but profitability returned in January 2026, potentially causing fluctuations in the capacity reduction process [2] - As of January, the inventory of breeding sows in monitored farms showed a slight increase, indicating a temporary stall in the capacity reduction process [2] - Despite fluctuations in corn prices, the overall supply of pigs is expected to remain ample for the next 10 months, supporting long-term feed demand [2] Group 4: Inventory Levels and Price Support - As of the end of January, port corn inventories were at historical lows, with significant year-on-year decreases, providing a bottom support for spot prices [2] - Pre-holiday stocking demand has led to a noticeable increase in inventory levels for grain enterprises, with feed companies' corn inventory days rising to 32.59 days, a near-high level [3] - Overall, while channel inventories are low, terminal enterprises have built sufficient stocks, indicating limited upward momentum for corn prices in the short term [3]

Investment Rating - The report maintains an "Overweight" rating for the industry, indicating a positive outlook for the long-term growth potential of China's pig farming sector [5][48]. Core Insights - China is the world's largest producer and consumer of pigs and pork, with a projected pig production of 705 million heads in 2025, accounting for 54.7% of global production [5][14]. - The report forecasts a gradual decline in pig supply starting in 2026, as the breeding sow inventory is expected to decrease, leading to a potential recovery in pig prices and profitability in pig farming [5][48]. - The degree of scale in pig farming in China is continuously increasing, with over 70% of pig farming expected to be large-scale by 2024, up from 47% in 2017 [5][48]. Summary by Sections 1. China's Position in Global Pork Market - China is the largest producer of pigs and pork globally, with a projected pork production of 57 million tons in 2025, representing 48.9% of global output [5][14]. - The country has a low reliance on pork imports, with an expected import volume of 1.3 million tons in 2025, which is only 2.2% of its total consumption [5][29]. 2. Breeding Sow Inventory and Supply Outlook - The breeding sow inventory in China is currently at 39.57 million heads, which is 101.5% of the normal holding capacity, indicating room for further reduction [5][33]. - The report anticipates a gradual decline in pig supply in 2026, with a projected decrease in pig prices and an eventual recovery in profitability for pig farming [5][48]. 3. Cost and Profitability Trends - The average price of pig feed is expected to remain low, with a current average of 2.62 yuan/kg, down 12.4% year-on-year [5][40]. - Profitability in pig farming has been under pressure, with losses reported at 130.11 yuan per head for self-bred pigs as of late December 2025, but a recovery is anticipated in 2026 [5][48]. 4. Industry Performance Metrics - The SW pig farming sector reported a total revenue of 307.87 billion yuan in the first three quarters of 2025, reflecting an 8% year-on-year increase [5][51]. - However, the third quarter of 2025 saw a decline in revenue to 103.2 billion yuan, a decrease of 6.4% year-on-year, primarily due to falling pig prices [5][53].