The livestock farming ETF GF (512450), with a 45% exposure to hog farming, rose more than 3% during the session.
On April 7th, the first trading day after the holiday, the three major A-share indices collectively rose. The pork concept was active again during the session, with Shenlian Bio hitting the 20cm daily limit up, and China Animal Husbandry Industry Co., Ltd. and Huatong Co., Ltd. also reaching the daily limit up. As of 11:11, the CSI Livestock Breeding Index, tracked by the GF Livestock Breeding ETF (512450), rose 3.12%.
On the policy front, the National Development and Reform Commission, the Ministry of Commerce, and the Ministry of Finance announced on April 1st the launch of the second batch of central frozen pork reserve purchases in 2026, requiring simultaneous implementation across regions. This move is seen as a clear signal from the government to support pork prices, aiming to alleviate the pressure on the industry caused by persistently low hog prices.
From an industry perspective, current pork prices have hit multi-year lows. As of April 7, 2026, the national average purchase price for standard hogs (Waisanyuan) was about 4.47 yuan/jin, having fallen below the 5 yuan mark. The so-called "Waisanyuan" refers to hogs where the sire, dam, and grandparent breeds are all imported. It is the most common and largest-volume breed in domestic hog farming and trading, directly reflecting the supply-demand situation and price trends in the national hog market, serving as an important reference for understanding the "hog cycle."
Meanwhile, geopolitical conflicts in the Middle East continue to push up breeding costs. With rising oil prices, increased freight costs, and higher fertilizer costs, feed companies have been adjusting prices intensively since March, with various feed products increasing by 50-100 yuan/ton. The two rounds of price hikes in March, combined, are expected to push the annual average price of full-price feed for finishing pigs to 3.35-3.40 yuan/kg, a year-on-year increase of 3%-5%. China Pig Network points out that feed accounts for 60%-70% of breeding costs. For every 10% increase in raw material costs, breeding profits are directly cut by 15%-25%.
Institutions generally believe that capacity reduction continues, highlighting the sector's allocation value.
In a thematic report released on April 7th, AVIC Securities pointed out that the current hog cycle is in a normal adjustment phase under the cobweb model. Influenced by breeding losses, policy guidance against "involution," and the trend of capacity reduction, the allocation value of the hog sector is becoming prominent. Leading companies in the industry, leveraging cost management, improved cash flow, and dividend potential, are gradually demonstrating strong value and dividend attributes.
Caitong Securities believes the hog sector is currently on the left side of the cycle, and accelerated clearance of breeding sow capacity in the future may become the core catalyst for the sector's performance. The industry faces multiple challenges including 'low hog prices, significant declines in piglet prices, and rising feed raw material costs.' The industry may see an accelerated clearance of breeding sow capacity, and the prosperity of the next upward cycle is worth anticipating.
The CSI Livestock Breeding Index, tracked by the GF Livestock Breeding ETF (512450), has a latest P/E ratio of 21.85 times, at the 38.69% percentile since listing. In terms of industry distribution, the largest weight is hog farming (45.2%), followed by food and feed additives (10.6%), and aquatic feed (9.9%) (Shenwan tertiary industry classification).
Against this backdrop, the allocation value of the GF Livestock Breeding ETF (512450) is becoming increasingly prominent. The fund closely tracks the CSI Livestock Breeding Industry Index, aggregating industry leaders such as Muyuan and Wens. Currently, the inventory of breeding sows remains above the equilibrium level, and deep losses are driving accelerated capacity clearance. This means there is still room for capacity reduction, and the inflection point for a cycle reversal has not yet arrived—for those positioning on the left side, this precisely constitutes the core logic for still being able to enter the market calmly at present.
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