Pork prices are temporarily on the rise, with a focus on industry competition costs over the past 25 years.

ZhongYou Securities released a research report stating that the national pig price has been rising for two consecutive weeks. As of April 18th, the average price of live pigs in China was 14.85 yuan/kg, an increase of 1.60% from the previous week, with prices rising more in the northern regions compared to the southern regions. The current round of pig production capacity has been slowly recovering since May 2024, and as of February 2025, there were only 40.66 million sows in the country, a slight increase year-on-year. The industry faces a stalemate between supply and demand, making it difficult for pig prices to fluctuate significantly in 2025. The reduction of production capacity in the industry may also be difficult to carry out. Profitability will be the focus of the industry this year, and cost differences will be the most effective discriminator of a company's profitability. Main points of ZhongYou Securities: Pigs: Prices are slightly bullish The national pig price has been rising for two consecutive weeks. As of April 18th, the average price of live pigs in China was 14.85 yuan/kg, an increase of 1.60% from the previous week, with prices rising more in the northern regions compared to the southern regions. The rise in pig prices is mainly due to: firstly, the impact of sentiment. Tariffs and retaliation measures have led to market expectations that prices of soybean meal and other commodities will rise, causing pig farming costs to increase, leading to reluctance from farmers to sell. Secondly, the entry of secondary breeding has pushed prices higher. The enthusiasm of individual farmers to sell large pigs before the Qingming Festival has been strong, easing the market pressure. However, there is no significant positive news on the demand side. It is expected that pig prices will have limited fluctuations. The pig prices in 2025 are expected to fluctuate narrowly, with a focus on costs. The current round of pig production capacity has been slowly recovering since May 2024, and as of February 2025, there were only 40.66 million sows in the country, a slight increase year-on-year. The industry faces a stalemate between supply and demand, making it difficult for pig prices to fluctuate significantly in 2025. The reduction of production capacity in the industry may also be difficult to carry out. Profitability will be the focus of the industry this year, and cost differences will be the most effective discriminator of a company's profitability. The downward trend in feed costs has come to an end, and the reduction of farming costs will increasingly depend on the level of farming and management of enterprises. It is recommended to focus on companies with outstanding cost advantages and then consider the valuation situation. As for the targets, 1) leading companies with obvious cost advantages and high certainty are recommended: Muyuan Foods (002714.SZ), Wens Foodstuff Group (300498.SZ). 2) Small and medium-sized companies with significant potential for cost reduction are recommended: Leshan Giantstar Farming & Husbandry Corporation (603477.SH), Zhejiang Huatong Meat Products (002840.SZ) etc. White-feathered chicken: fluctuating chick prices, focus on domestic breeding As of April 18th, the price of white feathered broiler chicks in Yantai was 3.10 yuan/piece, an increase of 0.2 yuan/piece from the previous week, with an average profit of 0.2 yuan per chick. The price of broiler meat also rose slightly by 0.05% to 3.75 yuan/jin. The current market transactions are chaotic, with severe polarization. Although there is profit in selling chicks, the increase in feed prices has made farmers hesitant to buy high-priced chicks. Supply is sufficient, and attention is focused on domestic breeding. The number of parent chickens renewed in 2024 was 1.5007 million sets, an increase of 17.25% year-on-year. Although there was a halt in overseas breeding in January and February 2025, with imports temporarily turning to France in March, the uncertainty of future imports adds new concerns. The uncertainty of imports will be the biggest risk and opportunity for the industry in 2025. On the one hand, the inventory of parent and grandparent chickens is still high, and the supply of the entire industry chain in 2025 is sufficient, so the industry is relatively unaffected for the time being. On the other hand, the uncertainty of overseas breeding has increased, and domestic replacements may accelerate, providing better opportunities for domestic breeding enterprises. Risk warning Risks related to outbreaks of animal diseases and fluctuations in raw material prices.