With clear signals that the government will support pig prices, the pork sector saw unusual upward movement, and Huatuan Shares hit the daily limit.

（Source: Caixin）

          Shanxi Securities stated that the pig breeding industry may face pressure in the first half of the year, but it is also a favorable time window for capacity reduction.            

On April 7, the pork sector rose sharply; Huadong Shares (002840.SZ) hit the daily trading limit, and Lihua Shares (300761.SZ), Shennong Group (605296.SH), Tiankang Biological (002100.SZ), Aonong Biological (603363.SH), Luonushan (000735.SZ), and others all moved higher.

In terms of the news, on April 1, the National Development and Reform Commission, the Ministry of Commerce, and the Ministry of Finance announced the launch of the second batch of central frozen pork reserve collection and storage for 2026, and required all localities to implement it in parallel. This move is seen as a clear signal that the government is propping up pork prices, aiming to alleviate the pressure on the industry caused by the ongoing slump in hog prices.

On April 2, according to a news release on the official website of the Ministry of Commerce, to maintain steady operation of the pork market and better leverage the role of central reserves in regulation, the Ministry of Commerce, the National Development and Reform Commission, and the Ministry of Finance have been carrying out the central frozen pork reserve collection and storage in recent days. The day before, Huashu.com released a notice titled “Notice on Matters Relating to Bidding Transactions for the Central Frozen Pork Reserve Collection for April 3, 2026.” In this round, 10,000 tons were listed for bidding transactions.

Shanxi Securities stated that the pig breeding industry may face pressure in the first half of the year, but it is also a favorable time window for capacity reduction. As the industry-wide tasks of reducing leverage and repairing balance sheets have not yet been completed, if industry prices continue to stay low, they may further help drive market-based capacity reductions. Under the guidance of the “anti-involution” policy for the pig breeding industry, capacity reductions under policy control are also progressing in parallel. In addition, the slope of the productivity efficiency curve for sow capacity represented by PSY may slow down, at least temporarily. This year, there could be a third round of relatively noticeable capacity reduction since 2021, and the fundamentals and valuations of the hog breeding industry are expected to recover.

Dongguan Securities pointed out that over the past two weeks, hog prices have continued to fall, and the hog-to-corn (grain) price ratio has been below 5:1 for more than a month. The Ministry of Commerce and other departments are carrying out the central frozen pork reserve collection and storage. With hog prices remaining depressed and breeding profitability leading to larger losses, upstream breeding sow capacity is expected to be forced to accelerate its capacity reduction. Pay attention to opportunities for low-position allocations in leading hog breeding companies under expectations of capacity reduction. In the case of broiler chicken farming, broiler chick prices have recently edged up, but downstream breeding profitability is still under substantial pressure; monitor opportunities for capacity reduction and improvements in profit margins at the margin. In terms of pets, China’s pet ownership penetration rate still has room to rise, and the domestic market still has growth momentum; watch for opportunities for domestically leading companies to rebound after overselling. In the seed industry, in the future the state will continue to push forward the seed industry revitalization with greater efforts and concrete measures, accelerating the realization of self-reliance and self-strengthening in seed technology, as well as independent and controllable seed sources; leading seed companies are expected to benefit.

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