3602 ten thousand head! The breeding sow inventory data as of the end of 9 has been released; an important signal of a reversal in hog prices has appeared!

The National Bureau of Statistics released livestock industry data for the first three quarters. At the end of the third quarter, the national breeding sow inventory stood at 3602 ten thousand head, a sharp year-on-year decrease of 433 ten thousand head. The decline reached 10.7%, widening by 4.2 percentage points compared with the second quarter. The current inventory level is only 96.0% of the normal holding level of 3750 ten thousand head, officially falling below the regulatory benchmark. An important signal of a reversal in hog prices has appeared.

Looking at overall production capacity, at the end of 9, the national live hog inventory was 42533 ten thousand head, down 2.6% year on year. In the first three quarters, 53739 ten thousand hogs were marketed, a slight year-on-year increase of 1.4%; the growth rate of marketings eased compared with the first half of the year. The data clearly show that the industry is accelerating the removal of basic production capacity. Under continuing losses, small and medium-sized independent farmers and some large-scale farms are proactively culling low-efficiency sows. Combined with the implementation of regularized policies to regulate hog production capacity, the pace of reduction in breeding sow capacity has clearly accelerated.

Farmers should interpret these production-capacity figures rationally. The breeding sow inventory falling below the retention red line this time means that the supply of live hogs will gradually contract over the longer term. This is a positive signal over the medium to long term, not a signal that prices will rise immediately in the short term. Market supply pressure remains considerable at this stage. Improvements in farming technology have continued to drive PSY higher, increasing sow productivity. Combined with the high proportion of large hogs in the market and average marketing weights remaining elevated, this has offset the reduction in output resulting from the decline in sow inventory. Short-term live hog supply remains ample, and the pattern of hog prices fluctuating near the bottom will be difficult to reverse quickly.

Overall, a breeding sow inventory of 3602 ten thousand head confirms that capacity reduction has entered a deeper phase. Signals of a cyclical bottom are gradually emerging, but a reversal in hog prices will still take time. On the consumption side, the fourth quarter is traditionally a peak season for pork consumption. As preparations for curing and preserving meat gradually get underway, demand is expected to see a temporary recovery, providing some support for hog prices. However, given the current supply and demand situation, the rebound in peak-season demand will be limited and is unlikely to directly drive a market reversal. The market will most likely continue to fluctuate while forming a bottom.

Looking back at recent market trends, hog prices have remained low for an extended period, and many farms have continued to incur losses of several hundred yuan per head, putting pressure on cash flow. The industry’s bottoming process is likely to continue. Hog farmers should remain cautious, operate prudently, and wait for the cyclical turning point to truly arrive.