Raising a pig results in a loss of 400 yuan! The live pig price has fallen for 8 consecutive weeks, only 7.9 yuan per kilogram in Hainan, and the government has started stockpiling. Experts predict that the pig cycle turning point will earliest occur at the end of the second quarter of this year.

Ask AI · Small-batch storage policy: what market signals are being released?

By our reporter, Zhang Rui

This image is suspected to be AI-generated

On March 4, this year’s first batch of central reserved frozen pork was launched, with storage and bidding trading on the market; the trading volume was 10,000 tons.

A month later, on April 3, this year’s second batch of central reserved frozen pork began storage and bidding trading on the market; the quantity remained 10,000 tons.

Previously, an official message on the website of the National Development and Reform Commission clearly stated: due to factors including a fall in consumer demand after the holiday, pig prices have declined, and they have entered the first-level alert zone for an excessive decline.

In fact, after a round of small peak around the Spring Festival this year, pork prices have continued to fall. Recently, relevant departments of the National Development and Reform Commission and the Ministry of Agriculture and Rural Affairs organized a symposium with pig breeding enterprises to analyze and assess the price situation, and to arrange efforts to do a good job in market regulation.

What is the industry situation right now? Compared with storage data from previous years, what effects will storage have on pig prices after the reserve buys? Does this mean the current pig cycle is about to reach its bottom? Is storage a leading signal that pig prices are about to rise? When will the turning point of the new pig cycle likely arrive?

Around a series of questions, reporters from the Daily Economic News interviewed multiple experts and breeding households.

Current situation: losses are “extremely severe,” with losses of more than 400 yuan per head

Monitoring data from the Ministry of Agriculture and Rural Affairs shows that, based on 500 county-level wholesale markets and collection points nationwide, in the 4th week of March the national average price of live pigs was 10.68 yuan per kilogram, down 3.3% month-on-month and down 29.8% year-on-year.

Lean meat-type pork carcass factory price total index running trend chart (unit: yuan/kg) Data source: Ministry of Agriculture and Rural Affairs

“This is the eighth consecutive week of decline (in pig prices). The current price has hit the lowest level since 2019,” said Wang Zuli, a researcher at the Institute of Agricultural Economics and Development, Chinese Academy of Agricultural Sciences, and a scientist on the industrial economics post of the National Pig Industry Technology System, to reporters.

Xia Chenfeng, an analyst in the pig industry at Nongxin Digital (Nongxin Digital Pig), told reporters that, according to data from Xingqingbao (Market Treasure), on March 20 the national average pig price first “fell below 10,” at about 9.93 yuan/kg; on April 1, the national average price of external three-yuan pigs (external three-way) was 9.38 yuan/kg, i.e., 4.69 yuan per jin. The province with the lowest price was Hainan, at only 7.9 yuan/kg; Xinjiang was 8.9 yuan/kg. Across the entire northwest, “all fell below 9.” Even the province with the highest price, Guangdong, was only 9.96 yuan/kg.

National average price of pigs (internal three-yuan) (unit: yuan/kg) Data source: Tonghuashun

She said that the industry has now entered a state of deep losses, and neither smallholders nor large group pig enterprises can avoid it. According to Xingqingbao’s calculations, as of the last week of March, under a self-breeding and self-raising model, for each slaughtered pig of a standard weight (about 120 kilograms), losses exceeded 300 yuan; under a purchased piglet model, because piglet prices are lower, losses are relatively smaller, but they are still more than 200 yuan per head.

Wang Zuli explained that, based on his monitoring, the average breeding cost across the whole industry is about 13 yuan/kg or above, and even leading enterprises’ breeding costs exceed 11 yuan/kg. In addition, recent increases in feed raw material prices may push costs even higher. “Currently, breeding costs around 12 yuan/kg are considered relatively good, while the current national average pig price is around 10 yuan/kg.”

Wholesale corn prices in large and medium cities across the country (unit: yuan/kg) Data source: Tonghuashun

“This means that when a breeding operation sells each market pig, it may incur a loss of more than 300 yuan. Historically, this is a comparatively severe level of loss,” Wang Zuli said. “The industry is basically in a state of widespread losses.”

Ding Wenqiang, who heads a breeding farm in Nanping, Fujian with an annual output of more than 1.6 million pigs (160,000-plus head), told reporters frankly that the losses are “extremely severe.” “We started losing money right after the New Year. Now the whole industry is in deep losses, but many are still holding on. A loss of 300 yuan per head is already considered relatively good.”

Feng Yonghui, chief analyst and chairman of the SouZhu website / China Pig Warning Network, told reporters that currently, under a self-breeding and self-raising model, losses per head have already exceeded 400 yuan per head.

“We predicted last year that the market this year would be bad, so the companies didn’t distribute dividends and kept the funds for this year,” Ding Wenqiang said. “We are currently producing normally; low-producing sows are eliminated, and new replacements are added from our back-up stock.”

Storage: two consecutive batches at the ten-thousand-ton scale release signals to support the market

Reporters sorted the frozen pork storage and reserve data since 2009. This year’s two batches of storage each only stored 10,000 tons, which is clearly lower than in previous years.

Why is that? What factors determine the storage quantity for a single storage operation?

The “Plan for Improving the Government Pork Reserve Adjustment Mechanism and Doing a Good Job in Ensuring Supply and Stabilizing Prices in the Pork Market” released in June 2021

In response, Xia Chenfeng said that when determining the scale for each storage operation, the National Development and Reform Commission and other departments will take a comprehensive view, including the most core quantitative indicators in the regulation plan such as the pig-to-grain price ratio and the change in the number of breeding sows. “A first-level alert (for example, when the pig-to-grain price ratio is below 5:1) must immediately trigger storage; a second-level alert (for example, when the pig-to-grain price ratio remains between 5:1 and 6:1 for three consecutive weeks) triggers storage depending on the situation. In short, different alert levels correspond to different storage intensity and scale. In addition, there are factors such as the rotation mechanism, market feedback and implementation effects, storage capacity limits, and fiscal budgeting.”

National pig-to-grain price ratio data over the past 10 years Data source: Tonghuashun

In her view, the two storage operations this time are smaller mainly for two reasons: first, the broader market background is that there is severe overcapacity, so storing more is mainly to release a policy “backstop” signal to stabilize market expectations and curb panic selling, rather than directly boosting prices; second, the policy orientation has shifted from “backstopping” to “capacity regulation.” This year’s policy focus has clearly shifted from reducing capacity at the source, which can be seen from the Ministry of Agriculture and Rural Affairs’ recent proposal to reduce the national number of breeding sows to around 36.5 million.

Wang Zuli also shares the same view. He also said that the country may consider conducting storage operations continuously for multiple rounds next. “If the amount stored in each single round is smaller but storage continues over time, it may produce a better effect than storing a larger amount all at once.”

Historical review: different storage effects

After carrying out storage, what impact will it have on pig prices? Based on past storage situations, does pig price rise after storage?

Wang Zuli: From past rounds of storage, there will still be some effects. We have made some statistics: generally, about a week after a storage policy is issued, prices either stop falling or the rate of decline slows down, and sometimes it also brings price increases. Even if it cannot lift prices upward, at least it can slow the speed at which prices fall.

But it’s not that every time produces very obvious effects. Some storage operations at certain specific times may show no effect. China’s monthly consumption of pork is 4.5 million to 5 million tons, and the storage volume relative to the overall market is small, so its impact on the market’s substantive supply-demand relationship is relatively limited; it mainly affects sentiment and confidence. Storage shows that the government will take measures to curb further declines. When breeding enterprises see the government act, it will strengthen their own confidence.

Central government reserved frozen pork reserve and release corresponding changes in hog average prices since 2019, with positive values indicating release or stock-out, and negative values indicating reserve-taking Data source: Xingqingbao data

Xia Chenfeng: The key role of storage is “backstopping,” not “lifting.” It is more about signaling than fundamentally changing supply and demand fundamentals.

Looking at past years, the way pig prices run after storage differs. The storage effect depends on the market environment at that time. For example, after storage in 2009, pig prices rebounded for 15 consecutive weeks; in 2019, during the second storage round, pig prices also showed a clear rebound. But the main reason why the effect was significant at that time was that supply-demand contradictions were not as sharp.

There are also situations where effects are not obvious. For example, in 2023 the state initiated four storage operations, with a total storage volume of 73,000 tons, but pig prices remained sluggish throughout the year. Against a backdrop of severe overcapacity, the storage volume is still too small compared with the actual supply pressure.

The most direct role of current storage is to stabilize market confidence and prevent breeders from dumping their products in a panic, thereby slowing both the speed and depth of the decline in pig prices. Its real value lies in giving the market time to breathe and guiding the industry to complete its own capacity reduction (capacity de-stocking and de-capacity process).

Cycle outlook: storage does not necessarily mean the bottom is in; “picking at the bottom” may still take time

Based on past situations, does starting storage mean this round of the pig cycle has bottomed out? Is storage a leading signal that a new round of pig cycle is about to begin?

Wang Zuli: Not necessarily. It may require multiple rounds of storage before the market reaches the bottom, and only then can the cycle reversal truly start. It doesn’t mean it will bottom out immediately after one round of storage. For example, storage started in March, but after that prices continued to fall.

Generally speaking, once storage begins, it means the industry has reached a very difficult time. Usually, when losses become severe, the market’s regulating role will cause the industry to start voluntarily and even accelerate capacity reduction. So, this basically indicates that the industry is at the bottom position, and prices may rise not for too long afterward.

Xia Chenfeng: Storage often appears near the bottom of a cycle, but it does not equal an immediate bottoming-out. More often, it is a signal to “grind at the bottom,” rather than the exact timing of a reversal.

The start of storage usually means pig prices are too low and have triggered a first-level alert. Based on historical experience, after storage pig prices may rebound quickly (such as in 2009 and 2019), or they may continue to probe the bottom for a period before rebounding (such as in 2012 and 2014). In some cases, even after storage, prices continue to fall (such as in 2021).

True bottoming out requires the industry itself to complete capacity reduction. On the supply side, the core contradiction is still that there is severe overcapacity. The number of breeding sows remains far above the regulatory target, the capacity reduction process is slow, and the true “restructuring” has not started yet.

Feng Yonghui: Looking at several pig cycles since 2009, only a few special cases saw periodic increases after storage or after continued storage, and the premise was that breeding sow capacity had already begun to be reduced before storage started. In essence, storage just happened to coincide with a periodic upswing. Storage is not a necessary condition for starting a pig cycle upward. The necessary condition is that breeding sow capacity must be reduced—otherwise it is impossible to start a new round of pig cycle. Instead of focusing on storage, it’s better to focus on the breeding sow capacity reduction situation; that is the core.

Capacity reduction: there is a lag in capacity reduction; in the industry, people say capacity reduction is still not enough

Is the market currently undergoing capacity reduction?

In fact, an industry insider who did not wish to be named told reporters that starting from June 2025, the Ministry of Agriculture and Rural Affairs will regulate capacity for large enterprises. However, this kind of regulation cannot take effect immediately and requires a 10-month transmission cycle. “It’s not that once capacity is reduced, the market supply quantity will come down right away. The current low prices are still caused by the severe over-supply from the previous period. If we look back 10 months from around July last year, roughly the effects may gradually show around May or June this year.”

Wang Zuli said that according to data from the National Bureau of Statistics and the Ministry of Agriculture and Rural Affairs, capacity reduction only began to be clearly visible starting from the last quarter of last year. At present, it is still in the early stage of releasing overcapacity—capacity reduction started in October last year—and theoretically it will only be realized as a decline in market supply volume around August this year.

He said that before October last year, the industry had profits, and only afterward did it begin to fall into losses. Therefore, capacity reduction is driven partly by policy guidance and partly by market forces; this might be the decisive factor—when the whole industry falls into losses, everyone then starts accelerating capacity reduction.

However, Ding Wenqiang said that the normal culling price for sows is 2 yuan per jin cheaper than the price for fat pigs, but currently the culling sow price is about 4 yuan per jin—only 1 yuan per jin cheaper than fat pigs. “This shows that everyone has not started culling large numbers of sows yet.”

Turning point forecast: as the second quarter draws to a close, the latter half is cautiously optimistic

How long will it take for the new pig cycle to arrive?

Wang Zuli: Around the period of this year’s second quarter—especially further into the latter part of the second quarter—the turning point may be closer. From dimensions such as supply-demand relations and market sentiment, prices in the second half of the year should be higher than in the first half. But because the overall scale of capacity reduction is limited, even if prices rise, they won’t rise too much. The prices indicated on the current hog futures market suggest that when prices rise to a peak in the second half of the year, they will be around 13 yuan/kg, roughly equal to the break-even line.

So, we should remain cautious about prices in the second half and not have overly high expectations.

Personally, I think large leading enterprises should take the lead in capacity reduction, because they have greater influence and higher market share, and they can produce a more obvious effect for the industry. Smallholders have a low market share, so capacity reduction led by them is limited in impact.

Xia Chenfeng: In the hog market in 2026, market prices will most likely show a “low first, then high” pattern, which is also the current consensus in the industry. The high-level breeding sow inventory in 2025 will be realized as a peak in hog slaughter/outturn in the second quarter of 2026, while the demand side is also in the traditional off-season. Therefore, pig prices are expected to likely fluctuate within a low price range, and industry losses will continue. Under policy pressure and deep-loss pressure, capacity reduction may start to accelerate. By the end of the second quarter into the third quarter, supply and demand may improve and possibly bring about a turning point.

Planning | Li Biao

Overall coordination | Yi Qijiang

Reporter | Zhang Rui

Editor | Huang Bowen

Visuals | Cai Peijun

Layout | Huang Bowen

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