Revisiting the "Pig Cycle": Industry cash flow is drying up, and supply clearance may arrive in a "non-linear" manner.

What Happened? — Multiple Historical Extremes Overlap, Draining the Industry into an “Hemorrhagic” Abyss

Prices are under duress across the board. As of June 26, 2026, the national average price for hogs sold per head stood at 9.4 yuan per kilogram. After it reached the lowest level in 20 years at 8.67 yuan per kilogram in mid-April, it has remained locked in a very narrow range of 9–10 yuan per kilogram, fluctuating at a low level and displaying a typical “bottoming-out” pattern. The piglet market has also collapsed in parallel: on June 23, the price of 7 kg weaned piglets fell to 157 yuan per head, down 64% year-on-year and 13% month-on-month. Compared with the industry cost line of 280 yuan per head, this has formed a deep inverted spread.

Historic indicators have been breached one after another. As of June 24, the hog-to-corn price ratio in large and medium-sized cities nationwide fell to 3.88, nearing the historic low recorded in April earlier this year. The hog-to-corn ratio is a core indicator for measuring profitability in pig farming—6:1 is the breakeven point, below 5:1 generally means losses, and below 4:1 indicates the industry has entered an extreme range of deep losses. The emergence of this historical extreme signals that the industry is in an extreme zone at the bottom of the cycle.

Farming operations are suffering comprehensive deep losses. As of June 26, under the self-breeding-and-self-fattening model, the average loss per head was 346 yuan; under the purchased-piglet model, the average loss per head was 339 yuan. The losses under the two models are converging and both represent the second-deepest loss level since 2014. The self-breeding-and-self-fattening model has been loss-making for more than 9 consecutive months since September 2025, while the purchased-piglet model has been loss-making for more than 10 months. The industry has shifted from merely “losing profit” to a sustained “cash flow drain,” with the entire sector in a systemic state of “hemorrhaging.”

Why Does It Matter? — The Nonlinear Liquidation Logic Under Cash-Flow Exhaustion

1. Why the Current Price Bottoming-Out Has Exceeded Expectations: A “Double Trap” of Supply Redundancy and Weak Demand

The grinding duration at the bottom of this cycle has far exceeded market expectations. The fundamental reason is a structural mismatch between supply and demand.

On the supply side, the earlier high level of breeding sows combined with a systematic jump in production efficiency created a “double squeeze.” As of March 2026, the national inventory of breeding sows was 39.04 million head, leaving 1.54 million head still needing to be reduced from the latest target of 37.5 million head. At the same time, the industry average PSY increased from 22.7 in 2023 to 24.3 in 2025. The marked improvement in farming efficiency means that with the same number of sows, actual slaughter capacity increases substantially.

In the first quarter of 2026, the national hog slaughter volume reached 200 million head, up 2.8% year-on-year, and pork output increased by 4.2% year-on-year. In addition, the frozen product storage utilization rate has risen to a historic high of 32.96%, up more than 15 percentage points year-on-year. The massive frozen inventory is like a “backup water jam” (a bottleneck), continuously suppressing the upside space for hog price rebounds.

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