Guoxin Futures: High supply pressure continues to suppress pig prices, remaining weak

Live pig futures continue to decline, with the main contract LH2605 down 2.85%, currently at 9,215 yuan.
In the spot market, according to my agricultural products network, the average price of external third-class live pigs nationwide is 8.99 yuan/kg, down 0.03 yuan/kg from yesterday, with the lowest price in Guizhou at 8.55 yuan/kg and the highest in Guangdong at 9.55 yuan/kg.
Fundamentally, the group’s slaughter plan for April continues to increase, but the average weight is beginning to decline, indicating that the group is actively reducing inventory;
The average weight of retail pigs continues to rise, and although some breeders have a willingness to sell, it will take time to digest the larger pigs.
In the long term, currently piglets are experiencing losses during the peak season, and the futures contracts from May to November are below the cost line, which may accelerate industry capacity reduction;
In the later stage, close attention should be paid to the validation of culling sow slaughter volume and price indicators.
In terms of operations, the number of piglet births and average weight indicators reflect that industry supply pressure will persist for a long time;
As long as the average weight does not effectively decrease, near-term contracts maintain a bearish outlook, mainly through rebound selling or selling out-of-the-money call options from a conservative perspective.
Long-term contracts have capacity reduction expectations, but the futures premium is high, and uncertainty is significant.
It is recommended to patiently wait for opportunities on the right side after capacity reduction accelerates. (Guoxin Futures)