Early trading movement! Pork concept stocks rise against the trend as capacity reduction enters a critical window period

On the morning session of April 2, both markets experienced fluctuations and consolidation. Pork concept stocks surged notably. By the close of the morning trading, the sector had increased by 1.32%, ranking among the top concept sectors in terms of gains. Among individual stocks, Juxing Agriculture and Animal Husbandry rose over 8%, Dayu Biology increased more than 7%, Huisheng Biology gained over 6%, Shennong Group rose more than 5%, and several other stocks—including Haida Group, Tiankang Biology, Muyuan Co., Ltd., Lihua Co., Ltd., and Huatong Co., Ltd.—all rose more than 3%.

Supply and demand imbalance drives pork prices to record lows

According to Securities Times, the National Development and Reform Commission, the Ministry of Commerce, and the Ministry of Finance will carry out the second batch of central government frozen pork reserve purchases and storage this year, requiring localities to conduct synchronized storage to better utilize reserves for market stabilization. Moving forward, the National Development and Reform Commission and other departments will continue to closely monitor hog market dynamics, increase reserve purchase efforts, strengthen comprehensive capacity regulation, guide breeders to plan production reasonably, and promote stable market operation.

Previously, the Price Monitoring Center of the National Development and Reform Commission released its analysis of the hog-to-corn feed ratio and hog prices for the fourth week of March 2026. During that week, the national hog price was 10.14 yuan per kilogram, down 3.15% month-over-month, marking eight consecutive weeks of decline and the lowest since 2019 for five weeks; the corn price was 2.40 yuan per kilogram, up 0.84% month-over-month, with three consecutive weeks of increase, reaching the highest in nearly seven months; the hog-to-corn feed ratio was 4.23, down 3.86% month-over-month, with eight consecutive weeks of decline and the lowest since 2019 for two weeks, far below the early warning line of 5:1.

Image source: NDRC

The core contradiction behind the continued decline in hog prices is a supply-demand mismatch caused by excess capacity. Data shows that in January 2026, the nationwide breeding sow inventory was 39.58 million head, exceeding the reasonable stock of 39 million. Coupled with a sharp drop in demand during the post–Spring Festival off-season, the imbalance of strong supply and weak demand has completely crushed hog prices. On the demand side, pork consumption share has steadily declined, from 62.1% in 2018 to 57.9% in 2025.

De-capacity enters a critical window

Huatai Futures pointed out that profitability in the hog breeding industry has continued to worsen, with the industry deep into cash flow losses. As of March 19, 2026, data shows that the average loss per head in the self-breeding, self-raising model was 280.18 yuan, and the average loss per head in the purchased piglet fattening model was 189.07 yuan. Post–Spring Festival, hog prices have continued to decline unilaterally, falling below the cash flow cost line for breeders, putting industry profitability under significant pressure.

From a cyclical perspective, profits from self-breeding and self-raising better reflect the industry’s true cost pressures and the core driver for capacity reduction. Based on the short-term bottoming trend of hog prices and the degree of profit pressure, it is expected that the critical window for accelerated capacity reduction in this hog cycle has already opened.

Shanxi Securities believes that the hog industry may face pressure in the first half of the year, but it is also a good time window for capacity reduction. Since the overall industry’s tasks of reducing debt and repairing balance sheets are still underway, continued low prices may further promote market-driven capacity reduction. Under the guidance of policies aimed at “anti-overcrowding,” capacity reduction under policy control is also progressing simultaneously. This year may see the third significant capacity reduction since 2021, with the industry’s fundamentals and valuations expected to recover.

In the A-share market, amid falling hog prices, some funds have opted to exit and observe. According to Eastmoney Choice data, the total financing balance of the 12 constituent stocks in the hog breeding sector was 8.495 billion yuan, a decrease of 428 million yuan since the start of the year. As leveraged funds exit, hog breeding stocks have collectively adjusted within the year, with only Jingji Zhinuo rising 8.9%. The largest decline was seen in Luoxianshan, which fell 25.3% year-to-date; Tianyuanshengwu, Muyuan Co., Ltd., and Tianbang Food all declined by more than 10%.

(Source: Eastmoney Research Center)