Dongxing Securities: Pig prices fluctuate, production capacity accelerates removal, and current expectations continue to boost sector markets

The Zhitong Finance App learned that Dongxing Securities released a research report saying that the short-term oversupply situation has not been mitigated, and that the fluctuation at the bottom of pig prices and continued loss of cash flow in the industry will lead to an accelerated loss of production capacity; the revision of the pig production capacity regulation plan has laid the policy foundation for capacity removal. Under continuous supervision and detailed implementation at the implementation level, production capacity regulation is still progressing in an orderly manner. The bank determined that under the combined effects of regulation and losses, the reduction in production capacity will gradually deepen. Currently, the industry is in a critical stage of capacity removal and a window period of left-hand layout. In terms of valuation, the industry index has rebounded from the bottom of the PB, but it is still at a low level in the past 3 years. The bank believes that the acceleration logic of capacity removal has been initially implemented, and continued refinement and removal are expected to continue to boost the sector market and continue to recommend investment opportunities in the pig breeding sector.

Dongxing Securities's main views are as follows:

Industry supply and demand performance: pig prices fluctuated in June, and the average monthly price dropped slightly

According to monitoring data from the Ministry of Agriculture and Rural Affairs, the average prices for piglets, live pigs and pork were 22.54 yuan/kg, 10.09 yuan/kg, and 19.74 yuan/kg respectively in June 2026, with month-on-month changes of -3.47%, -0.66% and -1.42%, respectively. Pig prices fluctuated narrowly around 9.5 yuan/kg in June, and pig prices ushered in a wave of significant increases in July. As of July 10, the average price of three-yuan pigs nationwide was 10.9 yuan/kg.

Supply side: Big pigs were concentrated in June, the pressure on the sunrise column increased, and the market supply was sufficient

Large pig stocks declined in July, and there was a supply gap. Combined with the typhoon's rainfall in the south affecting regional production and cross-regional circulation, the breeding side followed price increases, driving pig prices higher in early July. After mid-July, the mood relaxed, the gap was fixed, and prices stopped rising and falling. Demand side: Weak demand limited price increases, and the operating rate of pig slaughter fell 1.09 percentage points month-on-month to 32.41% in June. Summer consumption is suppressed by high temperatures, fresh meat consumption is suppressed by high temperatures, frozen products are suppressed by fresh sales, and prices are rising without incremental support on the consumer side. The improvement in demand is still waiting for the peak season to arrive after the weather cools down. It is expected that short-term pig prices will be dominated by shocks.

Trends in production capacity

According to data from the National Bureau of Statistics, 37.8 million sows were kept at the end of the second quarter of '26, a year-on-year decrease of 6.5%. The decline was 3.2 percentage points higher than in the first quarter. Judging from tripartite data, production capacity removal continued to deepen in June. The sample data of Yongyineng's storage column fell 1.33% month-on-month (-1.1% in May), and the steel union sample data decreased 0.98% month-on-month (-1.32% in May), and small and medium-sized farmers were eliminated faster. As of July 19, '26, the industry lost an average of 149.9 yuan/head for domestic breeding pigs and 129.47 yuan/head for purchased piglets. The industry's losses have reached 8-9 months since '25. The price of piglets rose slightly in July following the rise in pig prices, but it was still in a loss range. The price of binary sows was stable and transactions were light. The short-term supply and demand pattern is difficult to support the continued rise in pig prices. It is expected that Q3 pig prices will continue to fluctuate, and production capacity reduction will continue to advance.

Deepening policy regulation and accelerating capacity removal

The trend of refined policy regulation continues in 2026, and the 2026 Central Committee Document No. 1 proposes strengthening comprehensive regulation of pig production capacity. In May, the Ministry of Agriculture and Rural Affairs issued the “Implementation Plan for Comprehensive Regulation and Control of Pig Production Capacity (2026 Revision)”, which sets the normal number of sows that can reproduce nationwide at around 37.5 million. In June, the Ministry of Agriculture and the Development and Reform Commission once again organized a symposium with major production provinces and leading enterprises to guide precise regulation and demand that large pig companies respond to the call and play a leading role; relevant provinces strengthened supervision and revised and implemented production capacity control plans. At the end of the second quarter of '26, 37.8 million sows were kept, or 100.8% of normal holdings. It has entered the green regulatory range. Currently, provincial regulation plans are still being implemented intensively, and the enterprise side is progressing in an orderly manner in accordance with production capacity reduction requirements. It is expected that Q3 will still be a period of continuous deepening of production capacity removal.

Sales data of listed companies in June

Average sales prices declined month-on-month. Muyuan Co., Ltd., Wenshi Co., Ltd., Zhengbang Technology and New Hope achieved average pig sales prices of 9.69, 9.62, 9.68, and 9.35 yuan/kg in June, respectively. The average price decreased by 1.12%, 0.82%, 3.30%, and 1.37%, respectively, over the previous month.

The number of releases declined month-on-month. Muyuan Co., Ltd. (commercial pigs), Wen's shares, New Hope, and Zhengbang Technology achieved sales of 623, 257, 137, and 950,000 pigs respectively in June, changing -9.53%, -3.08%, 0.42% and -1.15%, respectively. The total listing volume of 19 pig companies decreased 6.06% month-on-month.

The list has all picked up again. Makihara Shares, Wen's Shares, and New Hope launched in June all weighed 126.98, 119.16, and 101.26 kilograms, respectively. Companies that have announced their monthly listing weight all had mixed ups and downs, and the average listing weight has rebounded.

Risk warning: Production capacity loss falls short of expectations, animal disease risk, corporate cost control falls short of expectations, etc.