Live pig prices decline, institutions expect acceleration in capacity destocking

[Global Times Finance and Economics Report] Live pig futures have declined for three consecutive trading days. On March 18, the close, the live pig futures contracts 2603 fell to 9.57 yuan/kg, and 2605 fell to 10.48 yuan/kg. Industry experts believe that the March pig slaughter volume is theoretically determined by the sow inventory in May 2025. According to Ruida Futures analysis, the sow inventory in that month is 40.42 million, which is 103.6% of the normal holding level. Coupled with the effective increase in sow production efficiency, capacity is sufficient.

Institutional analysis suggests that due to significant supply-side pressure and the demand entering the traditional off-season, the live pig market shows a supply and demand surplus pattern. According to Huatai Securities, since the Spring Festival, pig prices have continued to fall to around 10 yuan/kg, entering a phase of cash flow losses in the industry. Additionally, the slaughter weight has been passively increasing, reflecting that industry inventory pressure has not been fully released, and pig prices are expected to bottom out with strong persistence. As industry cash flow continues to deplete, capacity reduction is expected to accelerate further.

Looking ahead, Shenwan Hongyuan believes that as the consumption off-season begins, supply pressure remains high. It is expected that the fat pig prices will continue to decline, and with feed prices rising, industry cash flow pressure will keep accumulating. Meanwhile, piglet prices are likely to fall rapidly, jointly accelerating capacity reduction. Guangzhou Futures estimates that it is currently unclear how long it will take to promote capacity reduction. Based on past cycle lows, these often occur before May. (Wen Hui)