On October 11, Caixin reported (Reporter: Zhang Chenjing) that pork prices continue to rise, along with ongoing cost reduction. Most pig farming enterprises saw an increase in sales in September compared to the previous month. The third quarter saw a simultaneous rise in the volume and price of pork enterprises, leading to considerable profits. Caixin reporters learned from industry interviews that after a long period of capacity adjustments, the current slow growth in live pig inventory, coupled with the gradually emerging cost advantages of group farming, is expected to maintain industry prosperity in the fourth quarter, with continued profitability in breeding.

Recently, listed pig farming enterprises successively disclosed their September sales reports, with most enterprises maintaining a trend of increasing sales volume. Among them, Wens Foodstuff Group (300498.SZ), Zhengbang Technology (002157.SZ), Beijing Dabeinong Technology Group (002385.SZ), Tangrenshen Group (002567.SZ), and Tecon Biology Co. Ltd (002100.SZ) sold 2.5105 million heads, 0.3808 million heads, 0.5442 million heads, 0.3202 million heads, and 0.2817 million heads respectively in September, with month-on-month growth rates of 6.65%, 37.48%, 30.13%, 5.54%, and 17.62%.

Shanghai Ganglian E-Commerce Holdings' hog farming analyst Zhang Bin told Caixin reporters that since March of this year, profits from farming have turned positive, especially for large-scale enterprises. However, individual investors still face significant financial pressures. Starting from April, entering the stage of capacity recovery, overall pig production has increased, especially in the second half of the year, with a significant monthly increase in output.

"Pig King" Muyuan Foods (002714.SZ), New Hope Liuhe (000876.SZ), and ST Tianbang (002124.SZ) have slowed down their slaughter pace. The corresponding numbers for slaughter are 5.358 million heads, 1.1924 million heads, and 0.4364 million heads, with month-on-month declines of 14.15%, 6.66%, and 15.67%.

Muyuan Foods personnel explained to Caixin reporters: "The number of piglets sold in September was relatively small, while the sales volume of piglets in September compared to previous months was large. In addition, the number of sales days in September was one day less than in July and August, which may also have some impact on sales strategies and market demand fluctuations."

ST Tianbang stated that the decrease in the quantity of pork sold in September was mainly due to the low price of piglets in September and the increase in the company's capacity for rearing and fattening by contracted farm households in the south, leading the company to reduce piglet sales to external parties.

In terms of prices, after experiencing a previous continuous rise followed by highs, pork prices saw a small rebound in September. The average sales price of pork enterprises in the group in September ranged between 18.6 yuan/kg and 19 yuan/kg. However, the cost reductions for major pork enterprises this year have been more pronounced, with most breeding costs around 14 yuan/kg. Leading in cost efficiency, Muyuan Foods, Shennong Group (605296.SH), Leshan Giantstar Farming & Husbandry Corporation (603477.SH) have already entered the 13 yuan/kg range.

Currently, pork consumption in our country is stabilizing, and the fluctuation of live pig prices is mainly determined by the supply side. Previously, live pigs experienced a long period of capacity digestion. The growth rate of national sow inventory slowed down in the third quarter, and pig companies are cautious about replenishing inventory, providing support for the current round of pig price increases.

Recently, the prosperity of the hog industry has continued to rise. A reporter from Caixin learned from the front line that there has been a slight increase in consumption after the National Day holiday, and the enthusiasm for secondary fattening is high currently. The price difference between light-weight pigs and heavy-weight pigs is widening, making larger pigs more popular, and group enterprises are more active in sending pigs to market.

Looking ahead, hog companies are still expected to have profit margins in the fourth quarter, but it will be difficult for hog prices to exceed the previous highs. Zhang Bin further stated that based on the current supply-demand situation, the pressure is on the supply side, and the short-term bullishness from the demand side is hard to materialize. It is tentatively judged that the fourth quarter will be a call but not high. With the backdrop of improving demand and the continued support from secondary fattening, especially with a decrease in the year-on-year inventory of live pigs for individual households. Additionally, with feed ingredients like corn and soybean meal prices trending lower, the cost advantage of the breeding sector persists. Therefore, there is still profit space for the breeding sector in the fourth quarter. However, the increased pressure from secondary fattening and the breeding sector operations has put pressure on the supply side, resulting in a lower momentum of price increase compared to the earlier period, with a low possibility of prices being higher than in the earlier period (August).