As capacity reduction accelerates, interest in pork stocks has risen significantly. Wind data shows that on 10 month 21, the CSI Animal Husbandry and Aquaculture Index rose 1.71%, and the China Merchants Animal Husbandry and Aquaculture ETF (516670) recorded net subscriptions of 1.16 hundred million yuan in a single day. Its latest assets under management reached 21.56 hundred million yuan, a record high since its listing.
Far-month futures contracts continue to trade at a premium. At the close on 10 month 21, the LH2705, LH2707 and LH2709 contracts were quoted at 11245 yuan, 12220 yuan and 13110 yuan per ton, respectively, at a premium of nearly 3000 yuan per ton over the nearby-month contract, reflecting market expectations of improved supply and demand in 2027.
On the spot market, pig prices continued to fall. Data from China Pig Farming Network show that on 10 month 22 day, the national live pig (three-way crossbred）The average price was 9.77 yuan/kg, down nearly 15% year on year; on 10/21, the national average price was 9.86 yuan/kg, down 0.84 yuan/kg from the same period last month. Hog prices fell across much of the country, reaching a second bottom this year.Hog-to-grainThe price comparison has fallen to 4.18:1, below the breakeven line of 6:1, with the industry continuing to incur heavy losses.
Overall, pig farming is characterized by “strong expectations and weak fundamentals,” with support coming from accelerated capacity reduction. National Bureau of Statistics data show that at the end of the third quarter, the number of breeding sows nationwide fell to 3602 ten thousand head, down 10.7% year on year; the decline widened by 4.2 percentage points from the end of the second quarter. This was 96.0% of the normal holding level of 3750 ten thousand head, falling below the regulatory red line for the first time. Over the same period, the number of pigs in stock was 42533 ten thousand head, down 2.6% year on year, while the growth rate of marketings slowed from the first half of the year. It should be noted that supply factors—including PSY rising to 24-26, average marketed weight remaining high, and frozen pork storage capacity utilization exceeding three tenths—partly offset the effects of capacity reduction. In addition, capacity reduction takes about 10 months to feed through to marketings, so its actual impact on supply is expected to become concentrated in the middle of 2027—the main reason capacity is being rapidly cleared while pork prices remain persistently low.
CITIC Futures points out that since the second half of 2025, the number of sows has continued to decline, but the earlier reduction in production was gradual. After farming losses widened in the second quarter of 2026, capacity reduction began to accelerate and is still ongoing. In 2026, sow production efficiency continued to improve, partially offsetting the decline in numbers and delaying the supply inflection point. Market hog slaughter volume is expected to remain high in the fourth quarter of 2026, with an inflection point possibly emerging at the end of 2026. Slaughter volume is expected to decline gradually from its high level in the first quarter of 2027. On the demand side, hog demand gradually enters its peak season in the fourth quarter. Slaughter volumes and the price ratio of meat to live hogs generally follow seasonal upward trends, supporting hog prices. The supply-cycle inflection point is expected to gradually materialize at the end of 2026. Pressure from market hog slaughter volumes will begin to ease in 2027, as the cycle bottoms out and recovers.
According to Industrial Securities, the number of breeding sows is currently continuing to decline, and the logic for a cyclical reversal is gradually playing out, highlighting the sector’s allocation value. Cash flow losses and tighter policies are reinforcing each other. The current percentile rankings of market capitalization per head at various companies offer a relatively high margin of safety. Investors are advised to continue monitoring companies in the sector with cost advantages.
The Livestock Farming ETF (招商（516670）) tracks the CSI Livestock Farming Index (中证畜牧养殖指数（930707）), with major holdings including leading companies in the industry such as Muyuan Foods, Guangdong Haid Group, Wen’s Foodstuff Group, Zhengbang Technology, Meihua Holdings Group, New Hope Liuhe, 生物股份, Da Bei Nong Da Bei Nong: 002385 3.06-0.33%+自选, Shengnong Development, and Lihua Animal Husbandry. Its “pork exposure” exceeds 60%. Industry insiders say that historical performance shows how changes in pork prices are directly reflected in the CSI Livestock Farming Index, clearly outlining the “pig cycleThe ETF is expected to provide investors with a convenient tool for gaining exposure to the livestock farming sector.
Far-month futures contracts continue to trade at a premium. At the close on 10 month 21, the LH2705, LH2707 and LH2709 contracts were quoted at 11245 yuan, 12220 yuan and 13110 yuan per ton, respectively, at a premium of nearly 3000 yuan per ton over the nearby-month contract, reflecting market expectations of improved supply and demand in 2027.
On the spot market, pig prices continued to fall. Data from China Pig Farming Network show that on 10 month 22 day, the national live pig (three-way crossbred）The average price was 9.77 yuan/kg, down nearly 15% year on year; on 10/21, the national average price was 9.86 yuan/kg, down 0.84 yuan/kg from the same period last month. Hog prices fell across much of the country, reaching a second bottom this year.Hog-to-grainThe price comparison has fallen to 4.18:1, below the breakeven line of 6:1, with the industry continuing to incur heavy losses.
Overall, pig farming is characterized by “strong expectations and weak fundamentals,” with support coming from accelerated capacity reduction. National Bureau of Statistics data show that at the end of the third quarter, the number of breeding sows nationwide fell to 3602 ten thousand head, down 10.7% year on year; the decline widened by 4.2 percentage points from the end of the second quarter. This was 96.0% of the normal holding level of 3750 ten thousand head, falling below the regulatory red line for the first time. Over the same period, the number of pigs in stock was 42533 ten thousand head, down 2.6% year on year, while the growth rate of marketings slowed from the first half of the year. It should be noted that supply factors—including PSY rising to 24-26, average marketed weight remaining high, and frozen pork storage capacity utilization exceeding three tenths—partly offset the effects of capacity reduction. In addition, capacity reduction takes about 10 months to feed through to marketings, so its actual impact on supply is expected to become concentrated in the middle of 2027—the main reason capacity is being rapidly cleared while pork prices remain persistently low.
CITIC Futures points out that since the second half of 2025, the number of sows has continued to decline, but the earlier reduction in production was gradual. After farming losses widened in the second quarter of 2026, capacity reduction began to accelerate and is still ongoing. In 2026, sow production efficiency continued to improve, partially offsetting the decline in numbers and delaying the supply inflection point. Market hog slaughter volume is expected to remain high in the fourth quarter of 2026, with an inflection point possibly emerging at the end of 2026. Slaughter volume is expected to decline gradually from its high level in the first quarter of 2027. On the demand side, hog demand gradually enters its peak season in the fourth quarter. Slaughter volumes and the price ratio of meat to live hogs generally follow seasonal upward trends, supporting hog prices. The supply-cycle inflection point is expected to gradually materialize at the end of 2026. Pressure from market hog slaughter volumes will begin to ease in 2027, as the cycle bottoms out and recovers.
According to Industrial Securities, the number of breeding sows is currently continuing to decline, and the logic for a cyclical reversal is gradually playing out, highlighting the sector’s allocation value. Cash flow losses and tighter policies are reinforcing each other. The current percentile rankings of market capitalization per head at various companies offer a relatively high margin of safety. Investors are advised to continue monitoring companies in the sector with cost advantages.
The Livestock Farming ETF (招商（516670）) tracks the CSI Livestock Farming Index (中证畜牧养殖指数（930707）), with major holdings including leading companies in the industry such as Muyuan Foods, Guangdong Haid Group, Wen’s Foodstuff Group, Zhengbang Technology, Meihua Holdings Group, New Hope Liuhe, 生物股份, Da Bei Nong Da Bei Nong: 002385 3.06-0.33%+自选, Shengnong Development, and Lihua Animal Husbandry. Its “pork exposure” exceeds 60%. Industry insiders say that historical performance shows how changes in pork prices are directly reflected in the CSI Livestock Farming Index, clearly outlining the “pig cycleThe ETF is expected to provide investors with a convenient tool for gaining exposure to the livestock farming sector.