Pig prices fall below the 10 yuan mark, pig enterprises experiencing deep losses—has the "bottom reversal" signal appeared?

In recent weeks, domestic hog prices in China have been accelerating into a rapid plunge, with prices falling below the CNY 10 per kilogram threshold, to CNY 9.33 per kilogram.

As of March 30, the year-to-date decline in pig prices has expanded to about 24%. Current levels have fallen into the historical bottom-range seen in multiple hog cycles in 2009, 2014, and 2018. Hog futures contracts have also successively refreshed their all-time lows since listing, reflecting the market’s pessimistic sentiment about pig prices in the second quarter.

Regarding the hog cycle, over the past two years, the market has repeatedly discussed the idea that “the bottom is already in,” only to have it ultimately been refuted by persistently falling pig prices. This year, pig prices continued to sink deeply in the first quarter. Breeding losses across the industry have kept worsening. Combined with heightened attention from foreign institutions such as Goldman Sachs, Morgan Stanley, and UBS on the hog industry, whether this hog cycle can bring about a true bottom reversal has again become a core issue drawing shared focus from upstream and downstream players in the hog industry chain and the capital markets.

However, industry insiders believe that whether this hog cycle can get out of the slump and achieve a trend-level turnaround depends not on how low prices fall, but on whether the industry’s capacity reduction can be implemented in a substantive way, ultimately driving a fundamental reversal in the supply-demand relationship.

Pig prices keep plunging; losses across the industry intensify

Since 2026, operating pressure on China’s domestic hog industry has clearly intensified, and industry-wide losses have continued to expand. Since the start of the year, domestic hog prices have shown a pattern of “rising first, then falling again, and continuing to plunge.” After the Spring Festival, they have entered a faster downward channel; “a peak season that isn’t strong, and a slack season that’s even weaker” has become the most distinctive feature of the current hog market.

According to market monitoring data and information disclosed by Yongyi Consulting, on March 30 the national average price of hogs excluding the “foreign three” (i.e., three-way hogs) hit a low of CNY 9.33 per kilogram, not only thoroughly breaking through the market’s psychological level of CNY 10 per kilogram, and setting a new seven-year low since 2019, but also falling below the near-decade historical low of CNY 9.92 per kilogram in the second quarter of 2018. It fully reached the bottom price ranges seen across the past four hog cycles.

The futures market also weakened in tandem. The hog futures benchmark contract LH2605 touched a low of 9815 yuan per ton last Friday, again setting a new historical low for this product since listing. The prices on the board fully reflect the market’s pessimistic expectations for short-term hog price movements.

With hog prices continuing to probe lower, they have fully breached the industry’s all-in cost line for breeding, and the scale of losses has been accelerating. Data show that the breeding-and-fattening-from-self-raised mode has been in losses for six straight weeks. The latest loss per hog has expanded to 344 yuan. In some monitoring periods, the average loss per head exceeded 400 yuan. Losses in the purchased piglet fattening model are even more than 500 yuan per head.

At present, the industry’s average all-in comprehensive breeding cost is about 13-14 yuan per kilogram. The upside-down (inverted) margin between pig prices and the cost line reaches as much as nearly 4 yuan per kilogram. Even for top breeding companies that are widely recognized within the industry for cost-control capabilities, it is still difficult to escape the situation of ongoing losses.

Muyuan Co., Ltd. recently said in an institutional research visit that the company’s average breeding cost in 2025 fell to around 12 yuan per kilogram, down 2 yuan per kilogram year on year. However, based on current pig prices, Muyuan’s cost and spot prices are fully inverted, meaning that each kilogram of pork loses about 2 yuan.

While pig prices continue to fall, prices of major feed raw materials such as corn and soybean meal have remained at high levels of range-bound movement. Rigid support on the cost side has not moved down in step with pig prices. The release speed of cost gains is far slower than the pace at which pig prices are dropping, further magnifying the losses per unit for the breeding industry. This not only rapidly consumes the cash flow of breeding entities, but also continuously tests the industry’s ability to withstand risks.

The lackluster market conditions directly transmit to the operating side of listed hog enterprises. The industry’s first-quarter performance faces broad pressure. According to statistics compiled by a reporter from Yicai, from January to February 2026, 19 domestic listed pig enterprises cumulatively sold 30.43 million hogs, up 9.9% year on year. The industry overall has generally shown an operating pattern of “higher volume but lower prices.” Among leading enterprises, Muyuan Co., Ltd. (002714.SZ) had cumulative sold volumes of 11.612 million hogs in the first two months. Its sales revenue fell by 11.93% and 23.98% year on year in January and February, respectively. Wens Foodstuff Group (300498.SZ) and New Hope (000876.SZ) both saw year-on-year declines in sales revenue to varying degrees, and Wens’ February sales revenue reached the lowest level for the same period since 2025.

After entering March, the cumulative decline in pig prices has reached 11.4%, remaining continuously below the CNY 11 per kilogram level. This means that quarterly losses for listed pig enterprises are effectively set in stone, and March’s market conditions will further drag down the industry’s first-quarter performance.

Losses force acceleration in capacity de-stocking; expectations for a bottom reversal heat up

The core logic behind a hog-cycle reversal has never been about how deeply prices fall. Rather, it is about whether, after a sharp drop in prices, capacity can be driven to de-stock at an accelerated pace—until the supply-demand relationship undergoes a substantive shift.

This is also the key reason why, over the past two years, the market repeatedly raised discussions about a bottom, yet never truly witnessed a reversal—because the timing and magnitude of the industry’s capacity de-stocking have consistently fallen short of market expectations.

Data show that in 2025, the nationwide de-stocking of productive sow capacity totaled only 2%, and the de-stocking actions were mainly concentrated in the fourth quarter. At the same time, improvements in industry production efficiency further offset part of the practical effect of capacity de-stocking. As a result, the basic supply-relaxed fundamentals have never changed fundamentally, causing the market to fall repeatedly into a cycle of “bottom expectations coming up short.”

Industry insiders interviewed by the reporter said that the rapid fall in pig prices in March is the result of a three-way convergence among excess supply, weak demand, and deteriorating market sentiment.

On the supply side, at the end of 2025, the national inventory of productive sows was still 39.61 million head, slightly above the upper limit of 39 million head set by the Ministry of Agriculture and Rural Affairs. Combined with continued improvement in the industry’s production efficiency indicators, even if the productive sow inventory does not change, the actual slaughter pig output will continue to increase. The sustained transmission of high capacity creates rigid pressure for supply. Also, current average weights at slaughter for hogs remain at the highest levels in the same period over the past five years, further amplifying the market’s actual supply volume.

On the demand side, after the Spring Festival, pork consumption enters a traditional off-season, with terminal consumption down 15%-20% compared with pre-holiday levels. Slaughter enterprises have seen continued slowdowns in terminal shipment, and the market lacks effective demand-side support. On the sentiment side, pessimistic expectations form a negative feedback loop: breeding and restocking intentions among farmers have been lackluster; enthusiasm for second-stage fattening has dropped to an all-time low; and slaughter enterprises also show no proactive willingness to build inventories. Conservative actions by various market participants further intensify the magnitude of the decline in pig prices.

The oversold pig prices have boosted the market’s expectations for an accelerated de-stocking of capacity. Meanwhile, with pig prices standing in a historical-level bottom range, industry discussions about the cycle bottom have continued to heat up.

Foreign institutions such as Goldman Sachs, Morgan Stanley, and UBS have collectively turned their attention to China’s domestic hog market. They have intensively discussed near-term developments and growth prospects for China’s hog market. Several foreign institutions have explicitly stated that “the bottom has already appeared” in this hog cycle, and they are highly focused on the evolution of the cycle turning point.

Foreign institutions’ concentrated focus on the hog industry is not simply about betting on price overshoots on the downside. More importantly, it is based on recognition of the underlying operating logic of the hog cycle—deep losses will inevitably lead to the passive clearing of capacity, and that capacity clearing will ultimately drive a reversal in the supply-demand landscape.

In a research report released recently, UBS (UBS) stated that hog prices around CNY 10 per kilogram are highly likely to be at or close to the bottom of this cycle. It expects pig prices to rebound in the second half of 2026. The core support comes from the gradual recovery in consumption, as well as improved sentiment among second-stage fattening players and slaughter enterprises toward building inventories. Given the severity of current industry losses, it expects that productive sow capacity de-stocking will accelerate starting from March 2026 and gradually move toward a balanced supply-demand level. However, because market supply will still remain relatively sufficient, upside room for pig prices within the year will be clearly limited.

(This article is from Yicai Finance and Economics.)