Dongxing: Pork prices continue to decline, and the trend of capacity reduction has appeared. It is recommended to pay attention to Muyuan Foods (002714.SZ).

Dongxing releases research report stating that under policy guidance, the regulation of pig production capacity will remain the core theme for the near future. Expectations for the elimination of outdated capacity have increased, highlighting the cost advantages of high-quality capacity, and better profit elasticity is expected after the regulation is completed. In terms of valuation, the industry index PB has rebounded slightly, but it is still below the historical median, indicating a margin of safety for the sector. The recommendation is to focus on industry-leading, high-performance breeding target Muyuan Foods (002714.SZ). Key points from Dongxing: Industry supply and demand performance Pig prices continue to trend downward. In September 2025, the average prices of piglets, live pigs, and pork were 30.06 yuan/kg, 13.81 yuan/kg, and 24.50 yuan/kg, respectively, with month-on-month changes of -10.62%, -3.79%, and -1.92%. After the National Day holiday, the average price of pigs continued to decline, with the national average price for premium crossbred pigs reaching 10.90 yuan/kg as of October 20th. Supply side In September, there was a concentrated release of pigs, with plans for increased production in large-scale and social farms after the weather cooled down. Both the supply of pigs and the amount of meat on the market increased, putting pressure on pig prices after the National Day holiday. On the demand side, the Mid-Autumn Festival, National Day stockpiling, and cooler weather slightly boosted consumer demand, but cautiousness among slaughterhouses and slow stock reduction of frozen products limited the increase in fresh product consumption. By mid-October, the pace of entering the market for secondary fattening at around 10 yuan/kg has accelerated, providing some support for short-term pig prices. Trends in capacity changes Data from the National Bureau of Statistics shows that the number of breeding sows at the end of September was 40.35 million, a decrease of 0.07% compared to the previous month, and a decrease of 90,000 compared to the end of the second quarter. According to data from three sources, the sample data for breeding sows in September decreased by 0.84% compared to August for Yongyi, and decreased by 0.28% for Steel Union. Official and third-party data trends are consistent, showing a trend of capacity elimination as pig prices accelerate downward. Policy regulation combined with low prices may accelerate capacity elimination Previous meetings emphasized requirements for capacity regulation, slaughter weight, and environmental protection. Currently, policy regulation has entered a phase of full implementation, with leading companies actively responding. By the end of September, Muyuan Foods reduced the number of breeding sows to 3.305 million, a decrease of 126,000 from the end of June. As of October 24, 2025, the average profit per self-breeding pig in the industry was -185.68 yuan, and the profit per purchased piglet was -289.07 yuan/head, intensifying losses in breeding. Policy regulation and industry losses are expected to accelerate capacity elimination, with the possibility of a turning point in pig prices in the second half of 2026.