CITIC Securities: The destocking of pigs is expected to accelerate, and the outlook for prosperity is promising in Q4 2026 to 2027.

CITIC Securities released a research report stating that pig prices have fallen to a 10-year low. With ample supply, pig prices are expected to fluctuate at low levels in the first half of 2026. Continuous losses combined with increasingly strict capacity control policies may accelerate capacity reduction, and the pig industry is expected to remain prosperous in Q4 2026 and 2027. Currently, sector valuations are low, and the recommendation remains: 1) leading companies with cost advantages and dividend potential; 2) undervalued companies.

CITIC Securities’s main points are as follows:

Pig prices are falling rapidly, maintaining low-level fluctuations in the first half of 2026.

Due to abundant supply and post-holiday demand decline, pig prices have recently dropped sharply to around 10 yuan/kg, approaching a 10-year low. According to Yongyi Consulting data, the industry’s average loss this week (March 6–12) is 250–300 yuan per head, with losses further widening. Currently, the entire industry has been losing money for nearly six months. Looking ahead, the number of breeding sows, piglets, weight, and utilization rate of second breeding pens remain relatively high. It is estimated that pig prices in March and April will still be in a deep loss zone, with low-level fluctuations expected in the first half of 2026.

Losses and deepening capacity control policies may accelerate the reduction of productive capacity.

Since the beginning of this year, with the stabilization and rebound of bulk raw material prices, feed costs for pigs have risen under pressure. Coupled with the continuous decline in pig prices, the industry is rapidly losing blood. Recently, prices for piglets and culled sows have fallen sharply, and market-driven capacity reduction may accelerate. Since March, capacity control meetings for pigs have continued, and the number of breeding sows may be further reduced. Future capacity regulation remains a key focus, likely continuing to restrict industry capacity expansion. Under the dual influence of market-driven and policy-driven capacity reduction, the pig industry is expected to remain prosperous in Q4 2026 and 2027.

Risk factors:

Policy implementation intensity and progress may fall short of expectations; natural disasters; unexpected changes in pig prices; large-scale outbreaks of animal diseases; food safety issues.