Galaxy Securities: Pig prices may rebound somewhat this year; recommend focusing on leading pig farming companies

China Galaxy Securities research report states that after the Spring Festival, pork prices continued to decline, dropping below 11 yuan/kg in early March. Against the backdrop of worsening losses, the industry’s production capacity may accelerate its decline. Regarding the trend of pork prices in 2026, the annual average price may show a year-on-year decline. During this period, the extent of the impact of winter epidemics may lead to some rebound in pork prices within the year. It is recommended to actively pay attention to leading/sustained strong companies in the industry with good cost control, relatively healthy financials, and reasonable valuations.

The full text is as follows

【Galaxy Agriculture Xie Zhi You】Industry Dynamics 2026.3丨Pork Prices Continue to Decline & Losses Worsen, Capacity Reduction Ongoing

Core Viewpoints

February CPI year-on-year increase, 1-2 month agricultural product trade deficit +7%. In February, China’s CPI increased by 1.3% year-on-year, with the food category up by 1.7% (pork down by 8.6%); CPI rose by 1% month-on-month, with the food category up by 1.9% (pork up by 4%). From January to February, China’s agricultural product import value was $33.68 billion, up by 9.7% year-on-year, export value was $17.06 billion, up by 12.1%, and the trade deficit was $16.62 billion, up by 7.4% year-on-year.

In March, the agricultural index underperformed the CSI 300. The agricultural, forestry, animal husbandry, and fishery index dropped by 6.96% in March, while the CSI 300 fell by 6.21%. Compared to various sub-industry indices, the breeding industry (-2.75%) experienced a relatively smaller decline, whereas animal health (-16.13%) and fishery (-18.09%) performed relatively poorly.

Pig breeding: Continuous decline in pork prices & worsening losses may accelerate capacity reduction. On March 18, the pork price was 10.47 yuan/kg, down 15.6% from the end of 2025. On March 20, the profits from self-breeding and purchasing piglets were -297.68 yuan/head and -141.48 yuan/head, respectively. By the end of 2025, the number of breeding sows in China was 39.61 million, down by 2.9% year-on-year. After the Spring Festival, pork prices continued to decline, dropping below 11 yuan/kg in early March. We believe that under the backdrop of worsening losses, the industry’s production capacity may accelerate its decline. Regarding the trend of pork prices in 2026, we believe that the annual average price may show a year-on-year decline, with the extent of the impact from winter epidemics leading to a potential rebound in pork prices within the year. We recommend actively focusing on leading/sustained strong companies in the industry with good cost control, relatively healthy financials, and reasonable valuations.

Pet food: February export volume increased significantly, and the rate of price decline has slowed. In February, China’s pet food export value was 842 million yuan, up by 49.64% year-on-year. The export volume was 33,500 tons, up by 60.85% year-on-year; the average export price was 25.16 yuan/kg, down by 6.97%, with prices rebounding after hitting bottom in January. From January to February, the cumulative export value was 1.772 billion yuan, up by 15.06% year-on-year; the export volume was 73,100 tons, up by 38.57% year-on-year; the average export price was 24.24 yuan/kg, down by 16.96% year-on-year.

Risk Warning

Risks of livestock and poultry prices not meeting expectations, risks of animal epidemics, risks of raw material price fluctuations, policy risks, risks of natural disasters, etc.

(Source: Yicai)