Everbright Futures: A hard assessment was issued at the hog production capacity regulation meeting, and hog prices opened strong and kept climbing.

On Monday, the main contract for live hogs opened higher and continued to rise, with the intraday maximum gain approaching 4%. Looking at the driving factors behind the rise, last week two ministries and commissions held a production capacity regulation meeting with major producing provinces and leading pig enterprises, issuing hard tasks requiring the completion of production capacity reduction and elimination of low-efficiency sows by the end of September. The implementation mechanism shifted from guidance to rigid assessment, pushing for rapid supply-side clearance. Additionally, the meeting simultaneously required leading enterprises to strictly control secondary fattening, reduce slaughter weight, eliminate weak piglets, and compress market "hidden inventory" to avoid concentrated sell-offs suppressing spot prices, further strengthening expectations for a hog price bottom and recovery, driving today's hog prices higher.

In the spot market, fattened hog quotes rose, the spread between standard and fattened hogs widened, and market sentiment improved. Industry surveys show that large hog prices have continued to rise recently, with clear divergence in industry views. Some practitioners are optimistic about the upward trend in hog prices and plan to enter for secondary fattening; others maintain a cautious stance, as the issue of too many pigs has not yet been fundamentally resolved. In May, listed pig enterprises reduced their slaughter volume, and it is expected that listed slaughter volumes will continue to increase in June. Large-scale pig farms have recently continued to lower their slaughter weight for live hogs, while the slaughter weight for散户 (retail farmers) has simultaneously risen, reflecting that retail farmers' enthusiasm for slaughter has increased at this stage, forming a certain supplement to the short-term market supply of pigs. With the widening spread between standard and fattened hogs and the increase in open interest for weighted hog contracts, whether hog prices can continue to rise requires ongoing attention. (Everbright Futures)