Guolian Minsheng Securities: The trend of future capacity reduction is expected to strengthen, recommending low-cost pig farming enterprises

According to the Zhitong Finance APP, Guolian Minsheng Securities released a research report stating that, according to data from the Ministry of Agriculture and Rural Affairs, from May to November 2024, the absolute value of the breeding sow inventory reported by the National Bureau of Statistics will continue to increase. Coupled with the gradual improvement in industry production efficiency, the firm expects that the number of pigs slaughtered will maintain growth at least until September 2025. The overall pig price in 2025 is expected to run weakly, and the industry's profitability may decline, with a trend of capacity reduction expected to strengthen in the future. The report recommends excellent breeding companies with significant cost advantages and high slaughter realization rates, such as MUYUAN (002714.SZ) and WENS (300498.SZ); it also recommends the post-cycle animal health and feed sectors, such as HAID GROUP (002311.SZ).

Guolian Minsheng Securities' main points are as follows:

The Ministry of Agriculture and Rural Affairs reports a month-on-month decline in breeding inventory in July

According to data from the Ministry of Agriculture and Rural Affairs, the number of sows eliminated in large-scale pig farms nationwide increased by 2.1% month-on-month in July. By the end of July, the national breeding sow inventory was 40.42 million heads, a decrease of 10,000 heads month-on-month. From May 2024 to July 2025, the national pig farming industry has maintained profitability for 15 consecutive months, with an average profit of 108 yuan per pig slaughtered this year. On July 23, 2025, the Ministry of Agriculture and Rural Affairs held a symposium to promote the high-quality development of the pig industry: strict implementation of capacity control measures, reasonable elimination of breeding sows, appropriate reduction of breeding sow inventory, reduction of secondary fattening, control of slaughter weight of fat pigs, and strict control of new capacity.

Yongyi sample shows month-on-month growth in breeding inventory in July

According to data from Yongyi Consulting, the breeding sow inventory in Sample 1 in July was 9.889 million heads, an increase of 0.14% month-on-month (previous value 0.22%), with the growth rate narrowing; the breeding sow inventory in Sample 2 was 1.15 million heads, an increase of 0.52% month-on-month (previous value 0.12%). In July, the sales volume of pig feed increased by 4.9% month-on-month, with a 0.85% increase in replacement sow feed, a 1.2% increase in other sow feed, a 2.5% increase in teaching and nursing feed, a 2.3% increase in piglet feed, and a 6.6% increase in fattening feed. In early July, there was an increase in the enthusiasm for supplementary stocking, but as pig prices continued to decline in mid to late July, the reluctance to sell among individual farmers increased, supporting a month-on-month increase in the external sales volume of fattening feed.

Mysteel data shows little change in breeding inventory in July

According to Mysteel agricultural product data, the breeding sow inventory in the comprehensive sample in July remained flat compared to the previous month; the breeding sow inventory in the large-scale farming sample was 5.0986 million heads, an increase of 0.01% month-on-month (previous value +0.29%); the breeding sow inventory in the individual farmer sample was 174,000 heads, a decrease of 0.17% month-on-month (previous value +0.17%). In July, the domestic pig market fell from a high level, but the profit from slaughtered pigs at the farming end still existed, and the overall willingness of enterprises to actively reduce capacity was relatively limited, with upstream capacity being optimized and replaced. Overall, large-scale farms were affected by policy adjustments and localized outbreaks of swine fever, leading to a slight decline in sow capacity in Northeast, North China, and Southwest regions; the inventory of small and medium-sized individual farmers showed a slight decrease due to sporadic pig diseases and low piglet prices Risk Warning: Epidemic risk, long-term low livestock price risk, raw material price fluctuation risk