CITIC Futures: Sufficient pig source supply, prices fluctuate weakly

In the short term, the daily average slaughter volume of breeding farms monitored by Steel Union and Yongyi increased month-on-month in June. In the medium term, at Steel Union’s sample points, the number of newly born piglets from January to March increased month-on-month for consecutive months, while it declined month-on-month from April to May; at Yongyi’s sample points, the number of newly born healthy piglets decreased month-on-month from February to March, increased month-on-month from April to May, and the survival rate in farrowing pens has improved noticeably in recent days. At present, the number of piglets remains at a high level; based on a six-month fattening cycle, the market supply for live pigs in the third quarter is still relatively sufficient.

In the long term, the Ministry of Agriculture monitored a decrease in the nationwide stock of breeding sows capable of giving birth from July 2025 to March 2026, and the industry has begun to reduce capacity. At Steel Union and Yongyi’s sample points, the stock of breeding sows continued to decline month-on-month from April to May 2026, and capacity reduction is still being carried forward. However, in 2026, the per-sow productivity increases month-on-month, which may push the cycle turning point to the fourth quarter. Demand rose slightly before the Dragon Boat Festival, but demand is expected to weaken after the festival. Second-round breeding inventories are being reduced; and the year-on-year frozen-products warehouse capacity utilization rate remains at a high level.

In the short term, after the Dragon Boat Festival, marginal pork consumption is expected to decrease. In June, the daily average planned slaughter volume of breeding farms increased month-on-month. Livestock supply pressure remains, supply and demand are relatively loose, and pig prices are likely to trade in a range with a relatively weak bias. Looking ahead, in the first quarter of 2026, the number of newly born piglets is expected to remain high. In the third quarter, live pig slaughter volume is expected to stay sufficient, and prices are still expected to remain low. In the long term, capacity reduction is progressing slowly, but the scale is not enough. Per-sow output of breeding sows will continue to increase in 2026, which is expected to realize the cycle turning point in the fourth quarter of 2026. Moreover, the start pace of the cycle may be relatively mild, and with the current level of production cuts, there is no sign that the cycle will see a significant upward move. It is necessary to continue monitoring whether piglet birth volumes provide confirmation, as well as the extent of subsequent production cuts. (CITIC Futures)