Zhitong Finance app learned that the latest data from the National Bureau of Statistics shows that in September, from a year-on-year perspective, food prices rose by 3.3%, an increase of 0.5 percentage points from the previous month, impacting a 0.61 percentage point year-on-year increase in the CPI. Among food items, fresh vegetables, pork, and fresh fruit prices rose by 22.9%, 16.2%, and 6.7% respectively, with all seeing expanded increases.

After a period of correction, the pork prices are showing a "thunderous takeoff" trend.

For some time before, the market sentiment on the national breeding supply side changed rapidly, with an overall situation of accelerating and reducing prices when selling off. After entering September, pork prices experienced a continuous decline for more than 20 days. During the National Day holiday, domestic pork prices hit a temporary new low. However, with the significant reduction in medium and large pigs being sold off from the breeding end, the breeding end's selling pressure has eased. Coupled with an increasing trend of concentrated sow breeding, the enthusiasm to raise replacement swine has significantly increased. With supply and demand adjustments, pork prices have surged recently, with a short-term increase of nearly 5.6%, bringing the average domestic pig price back to the "9 yuan era".

Industry experts state that currently the nationwide inventory of breeding sows is lower than the same period last year, in a green and reasonable range, and pig production capacity is within a relatively reasonable range. With the official start of this year's winter, it enters the peak season for meat consumption. The overall inventory of breeding sows is currently at a relatively low level, and coupled with the previous phase where farmers concentrated on selling pigs, this will further alleviate the pressure of concentrated pig sales in the fourth quarter of this year. The demand for preserved meat in the southern region will also boost a comprehensive increase in pork prices.

For pig farming enterprises, another significant advantage is the reduction in costs. Recently, feed companies such as Haida, Liyuan, Xiangda Luotuo, Innovation Bio, and Kobond have successively announced a price reduction of 50-100 yuan/ton for pig and poultry feed. On September 30th, market research institution data showed that the average price of corn (feed raw material) was 2359 yuan/ton, a decrease of 53 yuan/ton compared to the previous day; the average price of soybean meal (feed raw material) was 3156 yuan/ton, a decrease of 111 yuan/ton compared to the previous day. The pig feed ratio (the ratio of pig prices to corn prices, the main feed raw material for pigs): 7.52:1. According to relevant regulations in China, the ratio of pig prices to corn prices should be at 5.5:1, indicating that pig breeding is basically at a breakeven point. The higher the pig feed ratio, the better the breeding profit.

With the double benefits of rising pork prices and falling costs, listed pig companies have once again embraced another wave of prosperity. The A-share market experienced a superb turnaround at the end of September. The Shanghai Composite Index broke through from over 2760 points to over 3670 points in just 6 trading days, and the total market turnover increased from less than 500 billion to 3.45 trillion in the short term. In the first week of October, the total turnover in 4 trading days reached 10.2 trillion yuan, setting a record for weekly trading volume. Despite a significant subsequent market correction, the market still attracts widespread attention, with investors rushing in to find the "best money-making opportunities in nearly a decade." Amid a comprehensive bull market, the reversal signals and rebound potential of the pork sector are also worthy of close attention.

Since 2006, China's hog industry has experienced four complete hog cycles, with each cycle consisting of an upward phase and a downward phase, taking about 3-4 years to complete. However, the hog cycle that began in mid-2018 saw record increases since 2006 due to factors such as African swine fever and production restrictions, with the largest price swing within the cycle reaching 268%. Looking back at the market cap of various listed hog enterprises in the past 5 years, pig farming companies once became the most sought-after kings in the A-share market at one point, but the subsequent downward cycle led to significant valuation markdowns of related listed companies.

Leading player Muyuan Foods (002714.SZ) saw its stock price soar to a historical high of 91.54 yuan and a total market cap of 477.059 billion yuan at the peak in 2021. By 2023, Muyuan's stock price had dropped to 31.17 at one point, a 65.95% drop from the peak. As of the close on September 30, Muyuan reported a total market cap of less than 250 billion yuan. In addition, many listed hog enterprises such as Beijing Dabeinong Technology Group, Aonong, Tianbang, New Hope Liuhe, and Guangdong Guanghong Holdings all saw significant declines from their peak stock prices, with some companies shrinking by over 80%.

Wang Xi, manager of Jiuxing Investment Fund, analyzed that the short-term fluctuation of hog prices is a micro perspective. Looking from the angle of national food security, pork, as an important component of food security, is certainly one of the cornerstones of the rejuvenation of a strong nation in the future. With the arrival of a comprehensive bull market in A-shares, the market's expectation of the intensity of this round of hog price increases might completely change. Hog farming enterprises will inevitably undergo significant valuation improvements. Looking back at historical bull markets, each one has unique characteristics and driving forces. This current bull market is a combination of various factors such as economic recovery, policy support, technological innovation, geopolitical restructuring, and the convergence of global capital flows. The pork sector, after experiencing the bottom of the cycle, is expected to see a resurgence in the new bull market era.