Huatai Securities: The clearance of sows in the first quarter continues to accumulate, and the layout of the pig industry is just right.

Huatai Securities Research Report stated that the National Bureau of Statistics recently announced that as of the first quarter of 2026, the inventory of breeding sows in the industry was 39.04 million, a decrease of 3.4% from the peak in the second quarter of 2025. Looking back at 2021 and 2023, the proportion of public fund holdings in animal husbandry and breeding increased significantly in the quarter following a cumulative decrease of 5.1% and 3.4% respectively. On the same day, the Ministry of Agriculture held a symposium on the development of the pork industry, once again emphasizing the reduction of production capacity. It is highly probable that the industry will experience losses and consumption of cash from the second quarter to the third quarter of 2026. With the combined effect of policies, non-linear reduction of production capacity may occur at any time, making it a good time for sector layout. Looking at the layout of the entire cycle, it is still preferable to select cost-advantaged companies.