Pig-to-grain ratio hits a ten-year low, yet leading company Wen's Shares has repurchased over 700 million yuan in just half a month! When will the industry see a glimmer of hope?

The Daily Economic News Reporter｜Yan Fengfeng    The Daily Economic News Editor｜Wu Yongjiu

Recently, the livestock breeding bellwether company Wen’s Co., Ltd. (Wens) has carried out intensive share buybacks. In the span of half a month, it cumulatively repurchased shares worth RMB 732 million. However, alongside this, the national ex-farm average price for “three-yuan hogs” (foreign-crossed three-breed hogs) once fell to RMB 10.06 per kilogram, hitting a new low in nearly seven years. The pork-to-corn price ratio also reached a new low in nearly a decade, with per-head breeding losses exceeding RMB 300.

Although the state has launched the central frozen pork reserve purchase and storage program, the dual squeeze of excess capacity and weak demand has also pushed hog futures prices to fresh lows. Since the beginning of this year, the hog futures contract has fallen by more than 20%. So why is hog prices so weak? When will the hog-breeding industry see a turnaround?

In response, reporters from The Daily Economic News conducted an investigative study. And during periods of industry weakness, many institutions also believe that market-based capacity elimination driven by low prices may be nurturing investment opportunities in the sector.

According to the share buyback progress announcement released by Wen’s Co., Ltd. on April 1, as of March 31, 2026, the company has cumulatively repurchased 43.3655 million shares—representing 0.6517% of the company’s total share capital—through centralized competitive trading. The total transaction value was RMB 732 million (excluding transaction fees). The highest trading price per share for this buyback was RMB 17.59, and the lowest was RMB 16.47.

It is worth noting that Wen’s Co., Ltd.’s buyback action this time was quite fast. On February 25, 2026, the company released its buyback plan, proposing to repurchase no less than RMB 800 million and no more than RMB 1.2 billion worth of shares, and to repurchase 0.5% to 0.75% of the company’s total shares. The plan was intended to implement an employee share ownership plan or equity incentives. According to the announcement, on March 16 Wen’s Co., Ltd. carried out its first buyback of the tranche; on that day, it repurchased shares worth RMB 96.4357 million. As of March 31, it had already cumulatively repurchased RMB 732 million. In other words, from March 16 to March 31—over half a month—Wen’s Co., Ltd. repurchased RMB 732 million. However, during the same period, the company’s share price still fell by 4.65%.

In fact, this is not the first time Wen’s Co., Ltd. has carried out large-scale share buybacks. The company had previously issued a buyback plan on September 18, 2024, proposing to repurchase shares worth RMB 900 million to RMB 1.8 billion for implementing an employee share ownership plan or equity incentives. Ultimately, on September 17, 2025, the buyback plan was completed: it repurchased 51.3869 million shares, accounting for 0.7723% of the company’s total share capital, with a total transaction value of RMB 900 million and a buyback average price of about RMB 17.52 per share. It is worth noting that the low point on the day the buyback plan was released this time—RMB 14.47 (pre-rights adjustment)—was also the company’s lowest price over the past four years.

Meanwhile, looking at Wen’s Co., Ltd.’s stock price over the past three years, it mostly traded in the range of RMB 16 to RMB 20. On April 3, the company’s closing price was RMB 16.31, again approaching the lower end of that range.

Behind Wen’s Co., Ltd.’s sustained buybacks is the fact that the hog breeding industry is going through a weak period. Data released by the National Bureau of Statistics shows that in 2025, China had 71,973 million hogs slaughtered/exited from production (ex-farm headcount), an increase of 2.4%.

With the increase in hog exit volume, it has also brought significant pressure to hog prices. According to data from Zhuochuang Information, the full-year average hog price in 2025 was RMB 13.74 per kilogram, down 17.97% quarter-on-quarter, the lowest in the past five years.

Entering 2026, the downtrend in hog prices has not stopped. Monitoring data from the China Hog Farming Network shows that as of the end of March 2026, the national ex-farm average price for “three-yuan hogs” once fell to RMB 10.06 per kilogram, hitting a new low in nearly seven years.

Hog futures have also refreshed historical lows since listing. On the Dalian Commodity Exchange, the main hog futures contract fell from 11,795 yuan per ton at the end of 2025 to a closing price of 9,370 yuan per ton on April 3. Within just about one quarter, the main hog futures contract’s decline reached 20.5%.

The continued drop in hog prices has caused the hog-to-corn price ratio (the ratio of hog prices to corn prices) to keep falling. According to the early-warning mechanism set by the National Development and Reform Commission, when the hog-to-corn ratio falls below 5, it triggers an “excessive downward move” level-one warning. According to data from Tonghuashun, recently the national hog-to-corn ratio has remained below 4, and on March 30 it fell to 3.73, a new low in nearly 10 years. Based on historical data, the national hog-to-corn ratio has mostly stayed in the 5–9 range, and in the extreme market in October 2019, it once approached a high near 20.

Under the backdrop of persistently low hog prices, hog farming enterprises are also under significant pressure. Data from a research report by Minmetals Futures shows that based on current slaughter/market-out costs, per-head losses have already exceeded RMB 300. On the other hand, piglet prices have also rarely fallen below production costs during the peak season, further reflecting the current pessimistic sentiment in the market. Zhuochuang Information shows that on March 27, profits from self-bred, self-raised operations were -316 yuan per head, with losses expanding by 264 yuan per head compared with the start of the year; profits from piglet fattening were -221 yuan per head, with losses expanding by 135 yuan per head compared with the start of the year.

Against the backdrop of sustained weakness in hog prices, work on the central frozen pork reserve purchase and storage has also quietly begun. On April 1, it was reported that the National Development and Reform Commission, the Ministry of Commerce, and the Ministry of Finance will carry out the second batch of this year’s central frozen pork reserve purchase and storage efforts soon, and require localities to carry out synchronized purchasing and storage to better play the role of reserve stabilization and adjustment. Next, the National Development and Reform Commission and other departments will continue to closely track market developments in hogs, increase reserve purchasing and storage efforts, strengthen comprehensive capacity regulation, guide hog farms to arrange production and operations rationally, and help promote stable operation of the market.

Driven by the stimulus of favorable news, shares of several listed hog farming companies saw notable gains on April 2, and hog futures also rebounded at one point during trading. However, it seems that the news about pork reserve purchasing and storage has had limited positive impact on the market. On April 3, many listed hog farming companies’ share prices had already fallen back to erase the earlier gains, and hog futures prices once again set new lows.

So why are hog prices so weak? When will the hog breeding industry get a glimmer of hope?

A supply “flood” combined with a seasonal consumption lull after the Spring Festival may be the main reason hog prices have been weak since this year. In this regard, a research report by Caitong Securities shows that in Q1 2026, increased sow capacity from the earlier period will be transmitted to the output of market hogs, and with slaughter/market weight staying at a high level, supply pressure continues to be released. On the demand side, it coincides with the seasonal lull in meat consumption after the Spring Festival. Against a background of supply exceeding demand, hog prices fall all the way. Caitong Securities believes that the current hog breeding industry is still in a stage of supply exceeding demand, and the industry needs time to digest inventory. In the short term, hog prices may remain at the bottom with range-bound volatility, making it difficult to see a trend reversal.

A research report by Minmetals Futures, meanwhile, argues that the current hog industry is experiencing multi-cycle resonance—production cycle, efficiency cycle, cost cycle, and others—leading to downward hog prices. In terms of production cycle, the industry is currently at the peak of capacity, which is the key period when prices turn down. In terms of efficiency and costs: since the African swine fever outbreak in 2019–2020, large amounts of capital have continued to pour into the hog breeding industry, continuously improving production efficiency and greatly flattening breeding costs. In addition, since 2023, corn and soybean meal prices have remained at low levels, and the low end of enterprises’ comprehensive breeding costs has dropped to below 12 yuan per kilogram. With improved efficiency and lower costs, when hog prices fall, breeding losses are not deep—or enterprises may still make profits. This greatly encourages upstream players to expand production scale, and the “second-breeding” (backyard/farm-scale) teams have also continued to grow. This ultimately offsets the decline in the number of breeding sows capable of reproduction, extending the hog cycle; capacity keeps stacking up toward the back, ultimately forming a severe excess situation. A full industry clearing likely will not occur until late 2026, or even the spring of 2027.

However, amid the backdrop of persistently low hog prices, many institutions believe that capacity elimination induced by low prices is nurturing investment opportunities for the industry.

In this regard, Shanxi Securities believes that if industry prices remain low and stay weak, it may further help the market-based elimination of excess capacity. Under the policy guidance of the “anti-overcrowding/involution” policy for the hog breeding industry, capacity de-capacity under policy control is also being promoted in parallel. In addition, the slope of the production efficiency curve of sow capacity represented by PSY may also slow down at least in stages. This year, there may be a third round of capacity elimination with a comparatively clear magnitude since 2021, and the industry’s fundamentals and valuations are expected to be repaired.

Caitong Securities believes that the industry is currently facing multiple difficulties such as “hog price bottoming out, a clear decline in piglet prices, and rising prices of feed raw materials.” The industry may usher in accelerated clearing of breeding sow capacity, and the upswing-cycle outlook for the next upward phase is worth looking forward to.

Disclaimer: The content and data in this article are for reference only and do not constitute investment advice. Before using this information, please verify it. Any actions taken are at your own risk.

Cover image source: The Daily Economic News media resource library

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