China Galaxy Securities: The contradiction between supply and demand of live pigs is becoming apparent, and it is expected to return to a pattern of low-level fluctuations within the year.

China Galaxy Securities released a research report stating that the output of live pigs is mainly determined by production capacity and breeding efficiency. The average estimated number of sows capable of reproduction in 2026 is 40.08 million, a year-on-year decrease of 350,000 with a slowing decline. Based on multiple assumptions, the industry's maximum sustainable yield (MSY) for 2026 is estimated to be around 18-18.5 million heads. These assumptions do not take into account the potential impact of the African swine fever virus type 1 that entered China at the end of March, and the MSY estimates will be adjusted accordingly. Based on these estimates, the potential range of live pig output in 2026 is 720 million to 740 million heads, and the average price of live pigs for the year may significantly decrease. In the short and medium term, pig prices may rebound, but are expected to return to a low level and fluctuate within the year. The main points of view of China Galaxy Securities are as follows: The trend of agriculture, forestry, animal husbandry, and fishery is under pressure, and the breeding industry is gaining momentum From the beginning of 2026 to April 17th, agriculture and animal health sectors have performed well with increases of 5.22% and 1.59% respectively, while feed and fishery sectors have declined by 5.32% and 8.33% respectively. During this period, the index of pig farming has fallen by 3.27%. Regarding the allocation of pig cycles in 2026, the bank believes that during the darkest moments of continued losses in the industry, it is advisable to actively allocate high-quality breeding stocks and wait for the significant elasticity brought about by the reversal of the future cycle. The market share of listed pig companies reached a new high in 2025, with both price and cost pressures rising in Q1 In 2025, 16 listed pig companies collectively slaughtered 194 million, an increase of 16.8% year-on-year; the market share reached 26.9% (an increase of 3.5 percentage points year-on-year), reaching a historical high. Since 2025, the second wave of acceleration in market share has begun, with excellent pig companies able to maintain their leading profits and widen the gap despite the pressure on pig prices, benefiting from continued cost optimization. In Q1 of 2026, 16 listed pig companies slaughtered 47.89 million heads, an increase of 9.4% year-on-year, but a decrease of 10.7% compared to the previous quarter; the average wholesale price of corn was 2.33 yuan/kg, up 7.9% year-on-year and 2.2% compared to the previous quarter; the average price of fattening pig feed was 3.38 yuan/kg, unchanged year-on-year and up 0.6% quarter-on-quarter. Overall, pig prices continued to decline during the quarter, while rising costs intensified the pressure. The contradiction between supply and demand of live pigs has intensified, exacerbating monthly losses and capacity reduction In March, 16 listed pig companies sold a total of 17.77 million heads, an increase of 39.7% quarter-on-quarter and 9.1% year-on-year; among them, leading pig companies Muyuan and Wens raised their output by 46.7% and 36.6%, respectively; most small and medium-sized pig companies also increased their output. Prices of listed pig companies have continued to decline since 2026 and are significantly lower than the industry average; the increase in average weight is significant. Regarding profits, the pressure brought by declining pig prices in March has exacerbated losses in the entire pig breeding industry; although leading pig companies have relatively better cost control, comprehensive losses are inevitable in the background of new low pig prices. With the increased magnitude of losses in pig farming in April, the industry's capacity may accelerate reduction. Risk warnings Risks such as livestock and poultry prices not meeting expectations, animal diseases, fluctuations in raw material prices, policy risks, and natural disasters.