Dongxing: Insufficient support for the rise in pig prices, expected to gradually accelerate the digestion of production capacity.

Dongxing releases research report stating that in October, after hitting bottom and rebounding, pork prices rebounded to over 12 yuan/kg by the end of the month, but the sustainability of the rebound trend was weak. In November, pork prices declined, with the average price of foreign three-element pigs in the country reaching 11.80 yuan/kg as of November 10th. On the supply side, in October, some enterprises reduced the weight of pigs for early slaughter in order to speed up fund recovery, leading to actual slaughter numbers exceeding the monthly plan. On the demand side, there was a slightly supportive trend in mid-October as finishing pig purchases increased, but this support waned after the rebound in pork prices. Looking ahead, with the implementation of regulations and accumulated losses, the elimination of production capacity is expected to accelerate, and pork prices are expected to see an inflection point upwards in the second half of 2026. Key points from Dongxing: Industry supply and demand performance: Pork prices rebounded in October, but support for price growth was insufficient. According to monitoring data from the Ministry of Agriculture and Rural Affairs, in October 2025, the average prices of piglets, live pigs, and pork were 25.80 yuan/kg, 12.57 yuan/kg, and 23.41 yuan/kg respectively, with month-on-month changes of -14.19%, -8.95%, and -4.47%. Pork prices experienced a rebound in October, reaching over 12 yuan/kg by the end of the month, but the sustainability of the rebound trend was weak, with pork prices declining in November, with the national average price of foreign three-element pigs reaching 11.80 yuan/kg as of November 10th. Supply side: In October, some enterprises slaughtered pigs ahead of schedule to accelerate fund recovery, resulting in actual slaughter numbers exceeding the monthly plan. After a slight rebound in pork prices, due to a pessimistic outlook for the future, there was an increased desire for cashing out leading to high monthly slaughter pressures. Demand side: In mid-October, the pace of finishing pig purchases increased slightly, providing some support for short-term pork prices, but this support weakened after the rebound in prices. At the end of October, temperatures in the north rebounded, suppressing meat consumption, and demand for preserved meat in the south had not yet started, leading to insufficient demand support on the consumption side. Trend in production capacity changes: According to data from the National Bureau of Statistics, the number of sows at the end of September was 40.35 million, a decrease of 0.70% month-on-month. From data from different sources, the sample data of Yongyi's sows decreased by 0.80% month-on-month in October, while Steel Union's sample data increased by 0.11% month-on-month. There were slight differences in the trends shown by data from different sources, which is expected to be influenced by the conversion of reserve sows in the previous period, in addition to a slight rebound in pork prices and a wait-and-see attitude among breeders, leading to limited willingness to reduce production capacity. Policy control combined with low prices could accelerate production capacity elimination Previous meetings clearly stated requirements for production capacity control, slaughter weight, and environmental protection, and currently, policy control has entered a stage of comprehensive implementation. Leading enterprises have responded positively, with Muyuan Foods reducing the number of sows by 126,000 compared to the end of June, reaching 3.305 million at the end of September. As of November 14th, 25 years, the average profit per head for self-bred and self-reared pigs in the industry was -114.81 yuan, and for purchased piglets, it was -205.64 yuan/head, with continuous losses in breeding. With the implementation of control measures and accumulated losses, the pace of production capacity elimination is expected to gradually accelerate, with the possibility of an upward turning point in pork prices in the second half of 26. Market cycle predictions Production capacity control guided by policies is expected to remain the core theme for the near future, with expectations of delayed elimination of excessive production capacity increasing. The cost advantage of high-quality production capacity will further highlight, leading to better profit elasticity after the completion of control measures. In terms of valuation, the industry index PB has seen some improvement but remains below the historical median, providing a safety margin for sector valuation. In terms of targets, it is recommended to focus on leading companies with cost advantages and high performance realization, such as Muyuan Foods (002714.SZ), and other related targets including Wens Foodstuff Group (300498.SZ), Tecon Biology Co.Ltd (002100.SZ), and Yunnan Shennong Agricultural Industry Group (605296.SH). October sales data for listed companies Average sales prices decreased month-on-month. In October, Muyuan Foods, Wens Foodstuff Group, Jiangxi Zhengbang Technology, and New Hope Liuhe achieved average sales prices of 11.55, 11.57, 11.28, and 11.28 yuan/kg for live pigs, respectively, with month-on-month changes of -10.33%, -12.22%, -11.53%, and -12.49%. Significant increase in slaughter volume. In October, Muyuan Foods (commercial pigs), Wens Foodstuff Group, New Hope Liuhe, and Jiangxi Zhengbang Technology achieved sales volumes of 708, 389, 169, and 91 million heads, respectively, with month-on-month changes of 26.97%, 17.07%, 20.87%, and 14.81%. Some enterprises reached a new high in October slaughter numbers. Slight increase in average slaughter weight. In October, Muyuan Foods, Wens Foodstuff Group, and New Hope Liuhe had average slaughter weights of 126.41, 112.08, and 100.91 kg respectively. Companies that had disclosed monthly slaughter weights showed more increases than decreases, with some slight increases in average slaughter weight. Risk warning Risk of fluctuating livestock prices, listed company slaughter volume expansion falling short of expectations, animal disease risk, and unexpected cost control by enterprises.