The country decisively takes action, with leading enterprises taking the lead to break the deadlock, responding to the "atypical" pig cycle

It has been a month, and the second batch of central government reserve frozen pork storage this year has arrived as scheduled. In early March, the National Development and Reform Commission (NDRC), together with relevant departments, launched the first batch of central frozen pork reserve storage for 2026. The listed storage quantity is 10,000 tons. According to Huashu.com, the storage bidding transaction being listed for this round is also 10,000 tons.

“Pork prices have fallen far too sharply.” Data from the Ministry of Agriculture and Rural Affairs shows that in the 4th week of March, the national average live hog price had dropped to 10.68 yuan per kilogram. This is down 3.3% month-on-month and down 29.8% year-on-year, hitting the lowest level in nearly 8 years. As the industry’s “barometer” for profitability—the hog-to-corn ratio (the ratio of the ex-farm price of hogs to the wholesale corn price)—in the 3rd week of March it had already fallen to 4.40:1, the lowest since 2019, and far below the primary alert line of 5:1.

When the state initiates reserve storage, it is like giving the industry a “confidence booster,” preventing panic selling by hog farmers and stabilizing market sentiment. Industry insiders and relevant experts believe that the downward movement of hog prices this round shows different characteristics from previous ones.

Price drops are not only because of the “hog cycle”

Hog production follows a typical pattern of cyclical fluctuations. In the industry this is commonly called the “hog cycle,” and a full cycle lasts about 3–4 years. The core logic revolves around price increases and decreases—breeding profits and losses—changes in production capacity—then rebalancing supply and demand. Unlike the past situation of a purely supply-demand imbalance, this round’s hog prices have fallen below the low point of nearly 8 years, driven jointly by the transition in consumption structure and inertia-driven expansion of capacity.

From the supply side, China’s hog breeding and slaughter capacity have reached historic highs. In 2025, pork output hit a record high of 59.38 million tons. After the Spring Festival this year, supply did not fall as usual in line with seasonal patterns. In February 2026, designated slaughter enterprises slaughtered 31.77 million hogs, up 40.7% year-on-year. This contrasts sharply with the weak demand caused by residents digesting stored meat after the holiday, directly worsening the supply-demand imbalance.

A relevant person from New Hope Group pointed out that the current “oversupply” is not due to blind expansion, but rather to the capacity expansion inertia brought by improvements in breeding and intelligent technology. Even though the number of sows able to produce piglets has decreased to 39.61 million in 2025 (down 1.16 million from the previous year), due to factors such as improved production efficiency, higher slaughter weights, and secondary fattening, the supply pressure has not been alleviated.

From the demand side, the structural decline trend is evident. Xiao Shaoqiong, Chief Economist of the China Meat Association, analyzed that pork consumption can be divided into three parts: household consumption at home, social catering industry ingredient consumption, and consumption of raw materials for processed meat products. Overall, consumption growth lags behind production expansion. Household consumption has declined most noticeably; it has fallen for three consecutive years: in 2023, per capita consumption was 30.5 kilograms; in 2024, it was 28.1 kilograms; and in 2025, it fell to 26.6 kilograms. Coupled with a decline in total population, the total amount of household consumption has entered a downward channel.

The underlying logic of policy is to reduce capacity

In the face of persistently weak hog prices, relevant departments have introduced a set of policy measures including reserve storage and capacity regulation. The core is “providing a backstop in the short term and solving the problem in the long term”—reserve storage in the short term prevents irrational collapse in hog prices; in the long term, through normalized regulation, the industry is guided toward healthy development.

However, industry insiders are clear that because reserve storage capacity is limited and capacity inertia remains, the pattern of strong supply and weak demand will be difficult to reverse in the short term, and hog prices in the second quarter will still run at low levels.

“The policy core is not directly stabilizing prices, but coordinating large enterprises and small independent farmers to reduce capacity together.” A relevant person from New Hope Group said that at present, leading enterprises have received policy guidance and are cooperating with capacity reduction, but many small independent farmers have not received clear guidance. They need to be forced to reduce capacity proactively through the downward movement of market prices. If strong stimulus to stabilize prices is applied too early, it may weaken the industry’s willingness to reduce capacity in the long run, which is not conducive to long-term development. Industry insiders also believe that current capacity regulation is not a “one-size-fits-all” approach; it aligns with the direction of high-quality development in animal husbandry and lays a solid foundation for long-term steady operations in the sector.

Leading enterprises take the lead in “breaking the deadlock”

The inversion of hog costs and prices across the industry is causing losses throughout the sector. The main difficulties in cost control are concentrated in two areas: feed and disease prevention. In the face of the market winter, leading enterprises drive cost reduction and efficiency improvement through technology, showing strong resilience.

It is understood that New Hope Group focuses on its core business and advances cost reduction and efficiency improvement across three dimensions: feed procurement, livestock management, and variety optimization. In feed procurement, it relies on a globalized network to smooth out raw material price fluctuations, lowering costs through technological optimization and intelligent upgrades. In livestock management, it strengthens disease prevention and control, strictly controls expenses, and promotes digital and intelligent construction to improve labor efficiency. In variety optimization, it focuses on breeding high-performance breeding pigs and leverages self-developed technologies to improve selection and breeding efficiency, thereby spreading and diluting breeding costs.

For Muyuan Co., Ltd., the fully loaded cost of hog breeding in 2025 is approximately 12 yuan per kilogram, and the target this year is further to reduce it to below 11.5 yuan. Qin Jun, Secretary of the Board and Chief Strategy Officer of Muyuan Co., Ltd., said that given the current market conditions, the company has made ample preparations on both the production side and the financial side. Cost reduction mainly relies on four paths: strengthening the disease prevention and control system, optimizing the talent incentive mechanism, increasing investment in breeding, and promoting intelligent hog farming.

Qin Jun also introduced that over the past two years, the company has continuously optimized its financial structure, reduced leverage, and maintained stable cooperation with major banks, with ample credit reserves. Recently, the performance of bond issuance in the public market has been good, which also reflects the capital market’s recognition of the company’s financial soundness and the safety of its cash flow. In addition, funds raised from the company’s listing in Hong Kong also provide some supplementary liquidity.

Recovery may be a slow process

Industry experts and enterprises have reached a consensus: the bottom of this hog cycle is expected to last until the end of the second quarter this year. A turning point may occur in July and August, but the upside is expected to be limited. In the third quarter, hog prices will still remain below the hog breeding cost line, and the recovery process will be relatively slow.

Xiao Shaoqiong said that three conditions must be met for a hog price turning point to appear: first, supply contraction—large pigs are cleared, average carcass weights return to a lower level, and monthly slaughter volume falls month-on-month; second, demand recovery—seasonal increases in pork consumption and higher utilization rates at slaughtering enterprises; third, capacity reduction—the inventory of sows able to produce piglets approaches the target after reduction, and leading enterprises accelerate capacity reduction to form a driving effect.

To ease the severe cyclical fluctuations in hog prices, long-term mechanisms must be built based on the current situation and with an eye on the long term. Industry experts recommend: first, normalized capacity regulation—scientifically set targets for sow inventory able to produce piglets, build an industry early-warning big data system to reduce information gaps; second, stabilize feed costs—improve grain reserves and the import adjustment mechanism, and strengthen risk-hedging systems such as hog futures and insurance; third, guide industry transformation—encourage leading enterprises to shift from “betting on cycles” to “steady operations,” and guide small and medium hog farmers to join cooperatives to avoid “everyone charging in and out”; fourth, increase the proportion of deep processing of pork—extend the industrial chain to absorb excess capacity, while also improving import regulation, expanding exports, and making overseas markets the “buffer” for hog prices.

Stable hog prices are tied not only to the “money bags” of tens of millions of hog farmers, but also to the “vegetable baskets” of hundreds of millions of households. The industry is currently at a critical stage of building the base of the cycle and improving quality through transformation. Short-term pressure is forcing the industry to shift from scale expansion to development that is driven by substance. As policies are implemented, enterprises achieve effective cost reductions, and capacity reduction continues to advance, the hog sector will gradually move out of the “boom-and-bust” cycle and move onto a new track of high-quality development. (China Economic Net reporter Ju Ran)