Core Insights - In the first three quarters, the national pig output reached 52.992 million heads, an increase of 0.962 million heads year-on-year, representing a growth of 1.8%, with the growth rate improving by 1.2 percentage points compared to the first half of the year, marking three consecutive quarters of growth [1] - Pork production totaled 4.368 million tons, an increase of 0.128 million tons year-on-year, reflecting a growth of 3.0% [1] - By the end of the third quarter, the national pig inventory stood at 43.680 million heads, an increase of 0.986 million heads year-on-year, which is a growth of 2.3%, and a quarter-on-quarter increase of 1.233 million heads, or 2.9% [1] - The inventory of breeding sows was 4.035 million heads, showing a year-on-year decrease of 0.028 million heads, a decline of 0.7%, and a slight quarter-on-quarter decrease of 0.009 million heads, or 0.2% [1]

- The report utilizes a methodology from the industry rotation series to track the configuration signals and business indicators of various industries, including coal, livestock farming, steel, structural materials, and fuel refining industries [9] Quantitative Models and Construction Methods Coal Industry Model - **Model Name**: Coal Industry Profit and Revenue Growth Estimation Model - **Model Construction Idea**: The model estimates monthly revenue and profit growth of the coal industry based on the changes in price and production capacity factors [10] - **Model Construction Process**: - The long-term contract mechanism for thermal coal determines the sales price for the next month based on the price index of the last month - Monthly revenue and profit growth are estimated using the year-on-year changes in price factors and production capacity factors [10] - **Model Evaluation**: The model predicts that the coal industry profit for October 2025 will continue to decline year-on-year due to coal prices being lower than the same period last year [14] Livestock Farming Model - **Model Name**: Livestock Supply and Demand Gap Estimation Model - **Model Construction Idea**: The model uses the relationship between the number of breeding sows and the quarterly pig slaughter rate to estimate the supply-demand gap for pigs six months later [15] - **Model Construction Process**: - The model assumes a stable proportional relationship between quarterly pig slaughter and the number of breeding sows six months prior - Formula: $ \text{Slaughter Coefficient} = \frac{\text{Quarterly Pig Slaughter}}{\text{Breeding Sow Inventory (lagged 6 months)}} $ [15] - Potential production capacity after 6 months is calculated as: $ \text{Potential Production Capacity (6 months later)} = \text{Breeding Sow Inventory (current month)} \times \text{Slaughter Coefficient (6 months prior)} $ [16] - Potential demand after 6 months is calculated as: $ \text{Potential Demand (6 months later)} = \text{Quarterly Pig Slaughter (6 months prior)} $ [16] - **Model Evaluation**: Historical experience shows that the slaughter coefficient method effectively identifies pig price upward cycles [16] Steel Industry Model - **Model Name**: Steel Industry Profit and Unit Profit Estimation Model - **Model Construction Idea**: The model predicts monthly profit growth and calculates unit profit for the steel industry by considering comprehensive steel prices and cost indicators such as iron ore, coke, pulverized coal, and scrap steel [18] - **Model Construction Process**: - Comprehensive steel prices and cost indicators are used to predict monthly profit growth - Unit profit is calculated based on the difference between steel prices and costs [18] - **Model Evaluation**: The model predicts that the steel industry profit for September 2025 will grow year-on-year, but the PMI rolling 12-month average remains flat, maintaining a neutral configuration viewpoint [23] Structural Materials and Building Engineering Model - **Model Name**: Glass and Cement Industry Profit Tracking Model - **Model Construction Idea**: The model tracks profitability changes in the glass and cement manufacturing industries using price and cost indicators, and designs configuration signals based on profitability changes [25] - **Model Construction Process**: - Price and cost indicators are used to track profitability changes - Configuration signals are designed based on profitability changes [25] - **Model Evaluation**: - Glass industry profit turned positive year-on-year in September 2025, leading to an upgrade to a positive configuration signal [30] - Cement industry profit remained flat year-on-year, and no positive signals were observed in new housing starts, maintaining a neutral configuration viewpoint [30] Fuel Refining and Oil Services Model - **Model Name**: Fuel Refining and Oil Services Profit and Configuration Signal Model - **Model Construction Idea**: The model estimates industry profit growth and cracking spreads based on changes in refined fuel prices and crude oil prices, and designs configuration signals based on oil prices, cracking spreads, and new drilling changes [31] - **Model Construction Process**: - Refined fuel price changes and crude oil price changes are used to estimate industry profit growth and cracking spreads - Configuration signals are designed based on oil prices, cracking spreads, and new drilling changes [31] - **Model Evaluation**: - The model predicts that the fuel refining industry profit for September 2025 will grow year-on-year due to lower inventory costs from recent low oil prices [31] - Observations show that oil prices in September 2025 were lower than the same period last year, maintaining a neutral configuration viewpoint for the fuel refining and oil services industries [37][38] Model Backtesting Results Coal Industry Model - **Profit Growth**: Predicted to continue declining year-on-year in October 2025 due to lower coal prices compared to the same period last year [14] Livestock Farming Model - **Breeding Sow Inventory**: 4,038 million heads as of August 2025, slightly decreased month-on-month [17] - **Potential Production Capacity (26Q1)**: 19,361 million heads [17] - **Potential Demand (26Q1)**: 19,476 million heads [17] - **Supply-Demand Balance**: Slightly tight [17] Steel Industry Model - **Profit Growth**: Predicted to grow year-on-year in September 2025 [23] - **PMI Rolling Average**: Remained flat for 12 months, not exceeding the threshold [23] Structural Materials and Building Engineering Model - **Glass Industry Profitability**: Turned positive year-on-year in September 2025 [30] - **Cement Industry Profitability**: Remained flat year-on-year in September 2025 [30] - **Manufacturing PMI Rolling Average**: Remained flat for 12 months [30] - **Housing Sales Area**: Observed a year-on-year decline in August 2025 [30] Fuel Refining and Oil Services Model - **Fuel Refining Industry Profitability**: Predicted to grow year-on-year in September 2025 due to lower inventory costs [31] - **Oil Price**: Observed to be lower than the same period last year in September 2025 [37] - **New Drilling Activity**: No significant year-on-year changes observed in the US [38]

Core Viewpoint - In May, both large-scale and medium-sized pig farming sectors experienced an increase in breeding sow inventory, with trends aligning between the two groups. However, as pig prices decline and profitability shrinks, changes in inventory levels may continue to reflect similar patterns in June [1][6][7]. Group 1: Breeding Sow Inventory - In May, the national breeding sow inventory increased month-on-month, with large-scale farms showing a shift from negative to positive growth, while medium-sized farms saw a narrowing increase [3][4]. - The increase in large-scale breeding sow inventory is attributed to ongoing expansion activities, including clearing and replanting, as well as replenishing stocks affected by previous pig diseases [3][4]. - Medium-sized farms faced a decline in piglet transaction enthusiasm and prices, leading to a more cautious approach, which resulted in a slower growth rate in breeding sow inventory [3][4]. Group 2: Pig Inventory - The national pig inventory also saw a month-on-month increase in May, with large-scale farms experiencing a narrowing growth rate while medium-sized farms shifted from a decrease to an increase [4][6]. - The average weight of pigs traded in May showed a slight decline, which, combined with falling prices and rising temperatures, led to reduced confidence among farmers, particularly in large-scale operations [4][6]. - Medium-sized farms benefited from lower costs for secondary fattening and feed, contributing to an increase in pig inventory as they did not sell off previously fattened pigs before the Dragon Boat Festival [4][6]. Group 3: Outlook for June - In June, piglet prices are expected to decline further, with many regions seeing prices drop below 500 yuan per head, and southern regions experiencing pig prices falling below the cost line of 14 yuan per kilogram [6][7]. - As profitability continues to decrease, both large-scale and medium-sized farms may adjust their strategies, with large farms potentially reducing weight and production to avoid losses, while medium-sized farms may accelerate the culling of breeding sows [6][7]. - Despite the anticipated decline in breeding sow inventory by the end of June, the decrease is expected to be limited due to ongoing expansion activities in certain regions [7].

Quantitative Models and Construction 1. Model Name: Coal Industry Profit Forecast Model - **Model Construction Idea**: The model estimates the revenue and profit growth rate of the coal industry based on changes in price and capacity factors[10] - **Model Construction Process**: - The pricing mechanism is determined by the long-term contract system, where the sales price for the next month is based on the last price index of the current month[10] - The model uses the year-on-year changes in price and capacity factors to estimate monthly revenue and profit growth rates[10] - **Model Evaluation**: The model provides a systematic approach to track and predict industry profitability, but it relies heavily on the stability of the pricing mechanism and external factors like market demand[10][14] 2. Model Name: Hog Supply-Demand Gap Estimation Model - **Model Construction Idea**: The model predicts the hog supply-demand gap six months ahead based on the breeding sow inventory and historical slaughter coefficients[15] - **Model Construction Process**: - The slaughter coefficient is calculated as: $ \text{Slaughter Coefficient} = \frac{\text{Quarterly Hog Slaughter}}{\text{Breeding Sow Inventory (Lagged 6 Months)}} $[15] - The potential supply six months later is estimated as: $ \text{Potential Supply (t+6)} = \text{Breeding Sow Inventory (t)} \times \text{Slaughter Coefficient (t+6, YoY)} $[15] - The potential demand six months later is estimated as: $ \text{Potential Demand (t+6)} = \text{Hog Slaughter (t+6, YoY)} $[16] - **Model Evaluation**: Historical data shows that this model effectively identifies hog price upward cycles, making it a valuable tool for supply-demand analysis[16] 3. Model Name: Steel Industry Profit Forecast Model - **Model Construction Idea**: The model predicts monthly profit growth and per-ton profit for the steel industry by integrating steel prices and raw material costs[18] - **Model Construction Process**: - The model incorporates comprehensive steel prices and costs of raw materials such as iron ore, coke, pulverized coal, and scrap steel to estimate profit growth rates[18] - **Model Evaluation**: The model provides a detailed profit analysis but is sensitive to fluctuations in raw material prices and global demand[22] 4. Model Name: Glass and Cement Industry Profitability Tracking Model - **Model Construction Idea**: The model tracks profitability changes in the glass and cement industries using price and cost indicators[23] - **Model Construction Process**: - The model monitors price and cost indicators to assess profitability changes and generate allocation signals[23] - **Model Evaluation**: The model is effective in identifying short-term profitability trends but requires additional macroeconomic indicators for long-term predictions[30] 5. Model Name: Refining and Oilfield Services Profitability Model - **Model Construction Idea**: The model estimates profit growth and cracking spreads for the refining industry based on changes in fuel prices, crude oil prices, and new drilling activities[31] - **Model Construction Process**: - The model calculates profit growth rates and cracking spreads using variations in fuel and crude oil prices[31] - Allocation signals are designed based on oil prices, cracking spreads, and new drilling activity[31] - **Model Evaluation**: The model provides a comprehensive view of industry profitability but is highly dependent on volatile oil price movements[35] --- Backtesting Results of Models 1. Coal Industry Profit Forecast Model - **Profit Growth Forecast**: Predicted a year-on-year profit decline for June 2025 due to lower coal prices compared to the previous year[14] 2. Hog Supply-Demand Gap Estimation Model - **Supply-Demand Balance**: Predicted a balanced supply-demand scenario for Q4 2025, with potential supply and demand both estimated at 18,226 million hogs[17] 3. Steel Industry Profit Forecast Model - **Profit Growth Forecast**: Predicted a slight year-on-year profit decline for May 2025, with PMI rolling averages remaining flat[22] 4. Glass and Cement Industry Profitability Tracking Model - **Glass Industry**: Predicted a year-on-year decline in gross profit for May 2025[30] - **Cement Industry**: Predicted a year-on-year profit growth for May 2025, driven by price recovery[30] 5. Refining and Oilfield Services Profitability Model - **Refining Industry**: Predicted a year-on-year profit decline for May 2025 due to lower oil prices compared to the previous year[35] - **Oilfield Services**: Observed stable new drilling activity and lower oil prices compared to the previous year, maintaining a neutral outlook[38]

Report Industry Investment Ratings No relevant content provided. Core Views - In the short - term, the prices of hog, egg, and corn will experience fluctuations. The hog market is under supply pressure with increased supply and weakening demand; the egg market has both supply and demand increasing, with short - term demand supporting prices and long - term supply pressuring prices; the corn market is supported by reduced supply from the grassroots level and decreased imports in the short - term, but faces pressure from deep - processing losses and new wheat substitution in the long - term [6][55][92]. - In the long - term, the hog price is likely to decline due to strong supply and weak demand; the egg price is under pressure from increasing supply; the corn price has an upward drive but its upside is limited by substitutes [6][55][92]. Summary by Catalog 1. Hog 1.1 Market Review - As of April 30, the national hog price was 14.94 yuan/kg, up 0.27 yuan/kg from the end of last month; the Henan hog price was 14.75 yuan/kg, up 0.16 yuan/kg. The main 09 futures price closed at 13910 yuan/ton, down 35 yuan/ton or 0.25% from the end of last month, and the 09 contract basis was 840 yuan/ton, up 195 yuan/ton [6]. 1.2 Supply - The inventory of breeding sows increased steadily from May to November 2024, with improved performance. From April to September, the supply is on the rise. The inventory decreased slightly from December 2024 to January 2025, rebounded in February, and decreased by 0.66% month - on - month in March, still 3.56% higher than the normal level. The supply pressure remains in the fourth quarter. The number of piglets increased year - on - year from November 2024 to February 2025, so the second - quarter slaughter pressure is high. The planned slaughter volume of enterprises in April increased month - on - month, the slaughter weight increased, and the fat - to - standard price difference was inverted [6][17]. 1.3 Demand - The monthly slaughter enterprise's开工 rate first decreased and then increased. After the May Day holiday, the pork market demand will weaken, but it will improve near the Dragon Boat Festival. However, the slaughter enterprises are still in loss, and the demand increment is limited. In April, the average daily slaughter of key slaughter enterprises was 121412 heads, up 4.62% from the previous month and 8.52% year - on - year; the slaughter gross profit was - 30 yuan/head, down 4.5 yuan/head from the previous month; the national frozen product inventory was 16.84%, down 0.01% from the end of last month and 0.46% from last year [6]. 1.4 Cost and Profit - The monthly piglet price decreased slightly, the breeding sow price was stable, and the breeding profit improved. As of April 30, the 15 - kg piglet sales price was 649 yuan/head, down 10 yuan/head from the end of last month; the binary sow price was 1634 yuan/head, unchanged from the end of last month. The breeding cost of enterprises with 5000 - 10000 sows was 13.31 yuan/kg, down 0.24 yuan/kg from the previous month; the cost of purchasing piglets for breeding was 13.87 yuan/kg, down 0.3 yuan/kg from the previous month. The self - breeding and self - raising profit of hogs was 145.34 yuan/head, up 24.34 yuan/head from the end of last month; the profit of purchasing piglets for breeding was 118.88 yuan/head, up 87.95 yuan/head from the previous month [6]. 1.5 Strategy Suggestion - Under the background of increased and postponed supply, the hog price is under pressure, but the futures discount has already reflected the weak expectation, so the decline is limited. It is recommended to gradually stop profiting on short positions and short at high prices after a rebound. For the 07 contract, the resistance level is 13800 - 13900, and the support level is 13200 - 13300; for the 09 contract, the resistance level is 14600 - 14700, and the support level is 13700 - 13800. Sell out - of - the - money call options on the 07 and 09 contracts at high prices, partially stop profiting, and re - enter after a rebound [6]. 2. Egg 2.1 Market Review - As of April 30, the average price of eggs in the main producing areas was 3.19 yuan/jin, up 0.05 yuan/jin from the end of March; the average price in the main selling areas was 3.22 yuan/jin, up 0.04 yuan/jin. The main 06 contract closed at 2942 yuan/500 kg, up 74 yuan/500 kg from the end of March; the main contract basis was 58 yuan/500 kg, 86 yuan/500 kg stronger than at the end of March. The egg price first rebounded and then declined, and the futures followed the spot price [55]. 2.2 Supply - In May, the number of newly - opened laying hens corresponding to the replenishment in January 2025 decreased month - on - month but increased year - on - year, with a large opening volume. Coupled with the non - increasing elimination of old hens, the supply continued to accumulate. In the long - term, the high replenishment volume from February to April 2025 means more newly - opened laying hens from June to August 2025, and the long - term supply increase trend is difficult to reverse. In April 2025, the national inventory of laying hens was 1.329 billion, an increase of 0.011 billion month - on - month and 0.089 billion year - on - year [55]. 2.3 Demand - In early April, the downstream replenishment demand after the Tomb - sweeping Festival and the approaching May Day holiday boosted the egg price. After the May Day holiday, the channel may have replenishment demand, and the Dragon Boat Festival stocking demand increases, so the seasonal consumption of eggs improves. As of the end of April, the monthly sales volume of eggs in representative selling areas was 29500 tons, up 1.99% from March [55]. 2.4 Strategy Suggestion - The 06 contract is expected to fluctuate in a range after the May Day holiday. Pay attention to the performance of the 3100 resistance and 2900 support levels. Treat the 08 and 09 contracts with a bearish view in general, and pay attention to the impact of feed and elimination [55]. 3. Corn 3.1 Market Review - As of April 30, the平仓 price of corn at Jinzhou Port in Liaoning was 2280 yuan/ton, up 90 yuan/ton from the end of March; the main 2507 contract of corn was 2377 yuan/ton, up 89 yuan/ton from the end of March; the main contract basis was - 97 yuan/ton, 1 yuan/ton stronger than at the end of March. The corn price first fluctuated narrowly and then rose rapidly at the end of the month, and the futures contract first fell and then rose [92]. 3.2 Supply - The grassroots grain sales are basically over, and the grain source has transferred to the trading end. Traders are reluctant to sell, and the supply is tight, which supports the price. However, after the price rises in May, traders' willingness to sell at high prices may increase, and there is a demand for making room for wheat in North China, which will increase the supply periodically. In March, the corn import was 80000 tons, the same as the previous month and a 95.3% year - on - year decrease. The import of international grains decreased year - on - year [92]. 3.3 Demand - The inventory of hogs and poultry is increasing, which drives the recovery of feed demand. Although wheat substitution has an impact on corn feed demand, it has not been carried out on a large scale, and the cost - effectiveness of corn is still high. The deep - processing industry is in loss, the operating rate has declined, and the demand increment is limited. As of April 25, the weekly feed corn inventory days were 35.74 days, an increase of 2.15 days from the end of March; the operating rate of sample deep - processing enterprises was 58.37%, a decrease of 5.45% from the end of March [92]. 3.4 Strategy Suggestion - Generally, take a stable - to - strong view. Wait for the futures to pull back to go long, and be cautious about chasing high prices. For the 07 contract, pay attention to the 2400 resistance and 2280 - 2300 support levels; for the 09 contract, pay attention to the 2320 - 2330 support level [92].