2025-08-19 14:44Summary of the Pig Farming Industry Conference Call Industry Overview - The pig farming industry is currently experiencing a price bottoming phase, with pig prices reaching a new low not seen in about a year and a half. This is primarily due to passive capacity reduction, ongoing production cuts driven by policy, and tightening environmental regulations [2][6]. Key Price Trends - In July 2025, the average prices for piglets, live pigs, and pork were 35.7 CNY/kg, 34.91 CNY/kg, and 25.37 CNY/kg, reflecting year-on-year declines of 18.65%, 20.05%, and 12.8% respectively. Month-on-month, piglet prices decreased by 4.09%, while live pig and pork prices saw slight increases of 1.72% and 0.31% [2][3]. - By early August 2025, the average selling price of live pigs had dropped to 13.82 CNY/kg, continuing a downward trend [2]. Supply and Demand Dynamics - The supply side has significantly influenced recent price movements. In early July, large-scale farms reduced output to support prices, but increased supply from smallholders later in the month exerted downward pressure on prices. Demand was weak due to seasonal factors, with expectations for improvement in late August or early September as schools reopen [4][6]. Environmental Regulations Impact - Stricter environmental policies are placing considerable pressure on small to medium-sized farms. The Ministry of Ecology and Environment has intensified inspections, particularly in southern water network regions, which is expected to accelerate the upgrade or exit of outdated production capacity, promoting high-quality development in the pig farming industry [5][6]. Profitability Analysis - As of August 8, 2025, self-breeding and self-raising pigs yielded an average profit of 45.13 CNY per head, while purchased piglets continued to incur losses of 134.14 CNY per head, indicating that self-breeding remains slightly profitable while external purchases are increasingly unprofitable [3][7]. Major Companies Performance - In July 2025, major pig farming companies reported the following slaughter volumes: Muyuan (7.5 million heads, down 10.4%), Wens (3.1 million heads, up 5.24%), New Hope (1.3 million heads, up 2.07%), and Zhengbang (700,000 heads, down 2.16%). Collectively, 17 listed companies slaughtered 15.81 million heads, a 5.3% decrease month-on-month [3][9]. - The average slaughter weights for July were: Muyuan (108.57 kg), Wens (105.69 kg), and New Hope (95.81 kg), with most companies showing a decrease in average weight, indicating a continued trend towards lighter slaughter weights [3][11]. Cost Structure and Competitive Advantage - Muyuan has a significant cost advantage, with its total cost in July 2025 reported at 11.9 CNY/kg. This positions leading companies favorably to achieve good returns this year and maintain profitability into 2026 [3][12]. Future Outlook - The industry is expected to continue facing a supply surplus in the short term, leading to a price bottoming phase. However, in the medium to long term, this situation may facilitate the exit of outdated production capacity and stabilize the market. Regulatory policies are likely to remain strict, with expectations for improved prices and profitability in the second half of the year and into 2026 as pressures ease [6][13][14]. Investment Recommendations - Investors are advised to focus on leading companies with clear cost advantages and high performance reliability, such as Muyuan, Wens, and Shennong Technology. The sector is currently undervalued, presenting safety and upside potential. Additionally, close attention should be paid to trade tensions and changes in import/export policies to mitigate risks associated with raw material cost fluctuations [8].