Core Viewpoint - The pig market in China is experiencing a downturn despite traditionally being a peak season, with prices dropping and signs of overcapacity in the industry [2][4]. Price Trends - As of September 26, the average price of external three yuan pigs was 12.71 yuan/kg, a decrease of 0.04 yuan/kg from the previous day, with half of the country experiencing prices around 5 yuan/kg [2]. - The average price of pigs was reported at 13.85 yuan/kg and pork at 24.51 yuan/kg, reflecting a 0.8% decline from the previous week [2]. Market Dynamics - The current pig industry is in its sixth cycle, with the internal expansion phase nearing its end, leading to accelerated capacity reduction due to policy and losses [2][5]. - The overall high inventory levels and the pressure to release stock from leading enterprises contribute to the overcapacity issue, compounded by weak consumer demand [4][6]. Production and Supply - The number of breeding sows is projected to remain high, with 40.8 million expected by November 2024, indicating a potential increase in supply by Q3 2025 [5]. - Major pig farming companies reported a cumulative output of 126 million pigs from January to August 2025, a year-on-year increase of 21.12% [6]. Policy and Regulation - The government has initiated measures to reduce the breeding sow population by approximately 1 million heads to stabilize the market [9][10]. - The central government has also been actively using reserve frozen pork to influence market prices, with 15,000 tons released in late September [10]. Industry Adjustments - Companies are adopting strategies to optimize their operations, such as reducing the number of breeding sows and controlling the weight of pigs at slaughter [13][14]. - Some smaller enterprises are shifting towards differentiated products, such as high-end pork, to maintain profitability despite market fluctuations [14][15]. Future Outlook - Analysts suggest that the market may stabilize by November as excess capacity is gradually absorbed, with a potential for price recovery [7][10]. - The industry is expected to evolve into a "three-three" structure, balancing large enterprises, specialized farms, and medium-sized family farms to better withstand market cycles [15].