GF Securities: The decline in sow breeding stocks in the 2nd quarter exceeded expectations and the cycle was reversed on the way

The Zhitong Finance App learned that GF Securities released a research report saying that by the end of the 2nd quarter of '26, the country had 424.91 million pigs, an increase of 450,000 heads over the previous year, an increase of 0.1%. Among them, 37.8 million sows were kept, a year-on-year decrease of 2.63 million, a decrease of 6.5%, and basic production capacity was reasonably reduced. The lowest point in pig prices has passed, and the reversal is imminent. The sector's valuation is relatively low, the layout value is prominent, and leading companies with cost advantages are preferred.

The main views of GF Securities are as follows:

The number of sows that can be raised fell to 37.8 million at the end of the second quarter, exceeding market expectations

According to data from the National Bureau of Statistics, the number of breeding sows in the 2nd quarter of 2026 fell to 37.8 million, down 3.2% from quarter to quarter, down 6.5% year on year; 25Q4 and 26Q1 were 1.8% and 1.4% respectively. Capacity depletion accelerated markedly in the 2nd quarter, and the overall decline exceeded market expectations. According to the “Implementation Plan for Comprehensive Regulation and Control of Pig Production Capacity (2026 Revision)”, the current breeding capacity of sows is 100.8% of the normal amount of 37.5 million heads, which is in the green range (normal fluctuation). Due to deep cash flow losses on the farming side in the 2nd quarter, combined with increased capacity regulation policies, capacity removal accelerated markedly, driving the industry to adjust its inventory and get out of the bottom. According to data from the National Bureau of Statistics, as of the end of the second quarter of 2026, the number of pigs kept was 424.91 million, an increase of 0.1% year on year. The year-on-year increase was 1.4 pct narrower than in the first quarter.

Pig prices quickly rebounded to 11 yuan/kg, and the cycle was reversed on the way

With industry inventory adjustments, overall supply and demand have gradually improved. Since the end of June, pig prices have continued to rise rapidly, with the national average price reaching 11 yuan/kg; pig prices in parts of the south have already risen to 12 yuan/kg, returning close to the industry cost line. According to Pig Search Network data, the average price of pigs nationwide was 11.03 yuan/kg on July 15, up 10% from the beginning of the month. In terms of piglet prices, according to Yongyi's consultation, the current average price of 7 kg piglets has risen to 260 yuan/head. Judging from sows, piglets, and feed data, they all correspond to showing that pig supply pressure may gradually decrease in the second half of '26. Taking into account peak demand season support in the second half of the year, pig prices will usher in an inflection point in the second half of the year. The cycle reversal is gradually approaching, and a new round of cyclical flexibility and sustainability is worth looking forward to.

Risk Alerts

Risk of large fluctuations in agricultural product prices, risk of damage to company operations due to animal diseases, policy-related risks, food safety risks, etc.