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 in the first half of 2026 are expected to fluctuate at low levels. Continuous deep losses combined with gradually intensifying capacity regulation policies may accelerate capacity reduction, and the pig industry outlook for Q4 2026 and 2027 is promising. Currently, sector valuations are low, and the recommendation remains: 1) leading companies with cost advantages and dividend potential; 2) undervalued companies.

Key points from CITIC Securities are as follows:

Pig prices are falling rapidly, maintaining low-level fluctuations in H1 2026.

Due to abundant supply and declining demand after the holiday, 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, pig weights, and utilization rates of second-stage 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 H1 2026.

Losses and deepening capacity regulation policies may accelerate capacity reduction.

Since the beginning of this year, with the stabilization and rise of bulk raw material prices, feed costs for pigs have increased under pressure. Coupled with continuous declines in pig prices, the industry is rapidly losing momentum. Recently, prices for piglets and cull sows have fallen sharply, and market-driven capacity reduction may accelerate. Since March, capacity regulation 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 outlook for the pig industry in Q4 2026 and 2027 is optimistic.

Risk factors:

Policy implementation may fall short of expectations; natural disasters; pig price fluctuations exceeding expectations; large-scale outbreaks of animal diseases; food safety issues.