Core Viewpoint
 
　　With the pig industry mired in normalized losses for 14 consecutive months, white-feather broiler producers also entered a predicament in the fourth quarter of 2026, losing 2—4 yuan per bird. The shared underlying logic of the two industries is that vast differences in production efficiency are becoming the ultimate arbiter of industry shakeouts. The stark gap in the pig industry’s PSY, ranging from 20 head to 34—35 head, signals that the white-feather broiler industry will likewise shift from “competing on cost and efficiency” to “competing on structure and value.” The white-feather chicken sector as a whole is still slightly profitable. Leading companies such as Wellhope’s white-feather chicken business still generate profits of 1—2 billion yuan, but the pressure from excess capacity of more than 40 hundred million birds in Shandong has become fully apparent. Industry strategy is shifting away from heavy-asset, full-industry-chain operations toward a focus on grandparent-stock breeding and further processing of ready-to-eat products, while midstream farming is moving toward open cooperation. The nearly ten-million-ton discrepancy between the official poultry meat output of 2837 ten thousand tons and the nearly 3800 ten thousand tons estimated from feed data is prompting the Ministry of Agriculture to launch coordinated capacity regulation for the pig and poultry industries. In the short term, the industry will be bottoming out from 9 to 10; in the medium term, if imports of grandparent stock continue to contract, the second quarter of 2027 may offer a window for a cyclical reversal.
 
I. Lessons from Pigs: The PSY Efficiency Gap Is a Matter of Survival and Real Money
 
　　The efficiency gap is a matter of survival. The most profound lesson in the hog industry today is not how far hog prices have fallen, but that the chasm in production efficiency is determining who will survive to the next cycle. The national average PSY (the number of weaned piglets provided per sow per year) is approximately 23 head; large-scale farms achieve 25—30 head, benchmark farms can reach 29—32 head, while many farms at the bottom of the industry still have a PSY of only around 20 head. The same sow produces 10—15 more weaned piglets per year at a high-efficiency company than at a low-efficiency one, translating into a cost gap of up to 200—300 yuan per market hog. This is a brutal battle with real money at stake: when hog prices fall below the cost line, high-efficiency companies may still earn a small profit or incur a slight loss, while low-efficiency companies are eliminated outright.
 
　　The efficiency gap in white-feather broilers is equally deadly. The white-feather broiler industry is seeing the same dynamic play out. Although the standardization of biological breeding is more advanced for white-feather broilers than for hogs, differences among companies in feed-to-meat ratio, survival rate, uniformity, and age at market likewise translate directly into a cost difference of 0.4—0.5 yuan per bird. For example, after Wellhope increased the scale of each housing unit from 3 ten thousand birds to 6 ten thousand birds, disease-related and operating costs per bird fell by 0.4—0.5 yuan. With broiler prices at the current level, resulting in a loss of 2—4 yuan per bird shipped, this cost advantage is enough to determine whether a company loses “2 yuan” or “4 yuan.”
 
Table 1 Comparison of Key Indicators in the Hog and Poultry Industries (2026)
 

Indicator

Hog industry

White-feather broiler industry

Current profitability

Self-breeding and self-rearing operations are losing approximately 200 yuan per bird, with cumulative losses for approximately 14 months

The breeding segment is losing 2—4 yuan per bird; the hatchery segment is losing 0.7—0.8 yuan per chick

Efficiency benchmark

PSY 29—32 birds (leading companies)

Feed-to-meat ratio of approximately 1.45—1.50, with a survival rate above 96%

Lowest efficiency value

PSY approximately 20 head (low-efficiency production capacity)

Feed conversion ratio above 1.60, survival rate below 92%

Cost impact of the efficiency gap

Cost difference per market hog: 200—300 yuan

Cost difference per chicken: 0.4—0.5 yuan

Updates from leading enterprises

Muyuan's full cost in month 9 was approximately 11.5 yuan/kg

Wens Foodstuff's white-feather broiler segment maintained profitability of 1—2 hundred million yuan

Industry production capacity regulation

Breeding sows in stock: 3780 ten thousand head; regulation target: 3750 ten thousand head

Grandparent stock replacement: 157.41 ten thousand sets (2025); parent stock inventory year-on-year: +11.27%
 
　　Data sources: Ministry of Agriculture and Rural Affairs, China; Zhuochuang Information; Boya Hexun; listed company announcements; Poultry Branch of the China Animal Agriculture Association; monitoring data for 2026–9 10.
 
　　The dilemma of “cutting capacity without cutting output.” The lesson from the hog industry is that even though the breeding sow inventory had been reduced to 3780 ten thousand head (only 0.8% short of the control target of 3750 ten thousand head), the annual increase of approximately 3% in PSY meant that “fewer sows did not mean less pork,” and hog prices still hit an eight-year low. Starting in 2026, regulators upgraded controls from the single indicator of “breeding sow numbers” to “dual controls on capacity and output.” The same logic applies to white-feather broilers: a marginal decline in grandparent stock inventory is not enough to reverse the high baseline of commercial-generation supply.
 
II. Industry status: White-feather broiler chickens shift from marginal profit to losses across the entire value chain
 
Five indicators reach record highs. In 2025, all five indicators reached record highs. 2025 was a major expansion year for the white-feather broiler industry. According to data from the Poultry Industry Branch of the China Animal Agriculture Association, the national grandparent-generation breeder stock replenishment volume in 2025 was 157.41 ten thousand sets; the number of parent-generation breeders in production stood at 8677.84 ten thousand sets, up 11.27% year on year; annual sales of commercial-generation chicks totaled 62.01 hundred million birds, up 12.63% year on year; annual broiler shipments totaled 90.57 hundred million birds, up 9.81% year on year; and slaughter volume totaled 92.94 hundred million birds, up 9.40% year on year. All five core indicators simultaneously reached new historical highs.
 
Table 2 Core Indicators of the White-Feather Broiler Industry Chain in 2025
 

Industry chain segment

Data for 2025

Year-on-year change

Grandparent breeder stock replacements

157.41 ten thousand sets

—

Parent-stock flock in production

8677.84 ten thousand sets

+11.27%

Of which: parent stock in production

6407.36 ten thousand sets

+10.52%

Commercial layer chick sales

62.01 hundred million birds

+12.63%

Broiler chickens shipped

90.57 hundred million birds

+9.81%

Slaughter volume

92.94 hundred million animals

+9.40%
 
　　Data source: China Animal Agriculture Association, Poultry Industry Branch, “Review of the White Feather Broiler Industry in 2025 and Outlook for 2026.”
 
　　By the end of Q3, the entire chain had shifted to losses. In 2026, supply pressure continued to be released. In the second quarter, the White Feather Broiler Comprehensive Price Index 87.28; although it rose by 5.80 percentage points year over year, the grandparent stock segment remained profitable, while the average profit from the parent stock segment through primary processing products was only 0.3 yuan per chicken, and profit margins had narrowed sharply. By the end of the third quarter and the beginning of the fourth quarter, the situation deteriorated sharply: from 9 to 10, live broiler prices fell to about 2.8 yuan/jin, close to historical lows; losses at the farming end reached 2–4 yuan per chicken, with both contract-raised and independent chickens incurring losses across the board; the average transaction price of commercial broiler chicks fell to 2.06 yuan/chick, down sharply by 36.22% month over month, and hatcheries lost about 0.78 yuan per chick. Frozen product storage capacity utilization at slaughtering companies remained high at 65%–70% for an extended period, and distributors prioritized destocking and temporarily deferred restocking.
 
　　Peak-season demand is weak, and the substitution effect has reversed. Notably, these losses occurred during the traditional peak consumption season for the Mid-Autumn Festival and National Day. Weak peak-season demand has become the industry’s new normal—ample advance stocking and high channel inventories have greatly reduced seasonal price elasticity. Meanwhile, the wholesale price of pork is approximately 19.5 yuan per kilogram, 3.3 yuan per kilogram lower than the price of dressed chicken at 22.8 yuan per kilogram. The price gap between pork and chicken continues to narrow, weakening chicken’s relative price advantage and shifting end-consumer demand back to pork.
 
　　Three. Two different dynamics in Shandong and Liaoning: the divide between premiums for smaller specifications and standardized products for large-scale distribution
 
　　Two markets, two different strategies. Shandong and Liaoning are China’s two major white-feather broiler production regions, but their market dynamics are entirely different. Shandong focuses on Western-style fast food and small chain restaurant channels, with mainstream farming of small-size chickens weighing 4.5—5.2 jin; smaller chickens actually command a premium. Liaoning, by contrast, is a standardized commodity market serving nationwide distribution, with a focus on selling slaughtered and cut-up products across China and for export. Larger standardized chickens are more competitive there. Applying Shandong’s business model to the Liaoning market, or vice versa, would be a poor fit.
 
Table 3 Comparison of the white-feather broiler industries in Shandong and Liaoning
 

Dimension

Shandong

Liaoning

Annual output/slaughter volume of 2025

A total of 29.87 hundred million animals were shipped

Slaughtered 19.82 hundred million animals (accounting for 22.95% of the national total)

Chicken production

397.2 ten thousand tons

Total output value of the entire industrial chain: 1334.42 billion yuan

Parent stock inventory

More than 2626.96 ten thousand sets (over 30% nationwide)

—

Mainstream farming specifications

Small-size chickens weighing 4.5—5.2 jin

Standard specifications for mass-market products

Core channels

Western fast food and small restaurant chains

Nationwide distribution, exporting to Japan, South Korea, and Southeast Asia

Capacity pressure

Processing companies with capacity of approximately 40 hundred million birds are seeing losses emerge across the board.

Approximately 20 hundred million birds; the pressure from oversupply has not yet fully emerged.

Industry characteristics

Strong in breeding stock and incubation (Yantai accounts for 25% of the national grandparent stock)

Slaughtering, processing, and export advantages are prominent
 
　　Data sources: Shandong Provincial Bureau of Animal Husbandry and Veterinary Medicine, Liaoning Animal Husbandry Association, China Economic Net, Xinhua Net; 2025 annual data.
 
　　Shandong’s overcapacity became apparent earlier, while Liaoning’s pressure is lagging. The overcapacity problem across Shandong is more severe than in Liaoning. Shandong’s annual broiler chicken slaughter volume is nearly 30 hundred million birds, and its chicken production is nearly 400 ten thousand metric tons. Processing companies are concentrated there, and competition is fierce. Liaoning’s slaughter volume is about 20 hundred million birds, and it grew by only 1.9% year on year in the first half of the year, with capacity being released at a measured pace. Loss pressures on processing companies in Shandong have now become fully apparent, while Liaoning’s overcapacity pressures have not yet been fully exposed. This means that if market conditions continue to deteriorate, Liaoning’s lagging pressure may be transmitted and released in 2027.
 
　　Four. Strategic differentiation: from a closed loop across the entire industry chain to the two ends of the smile curve
 
　　From a capital-intensive closed loop to a focus on both ends. The first half of industry competition was a contest of cost and efficiency; the ultimate purpose of all efforts to improve quality, make improvements, and invest was to reduce overall costs. But as the second half arrives, the dimensions of competition will shift toward industrial structure and product value. One landmark strategic shift is that leading companies are no longer seeking to cover the entire value chain, but are focusing on both ends of the smile curve—upstream grandparent breeding and downstream further processing of prepared foods—while midstream farming and slaughtering are shifting to open collaboration.
 
　　Wens’ strategic iteration is representative of the industry. Taking Wens as an example, it previously pursued a closed-loop, full-industry-chain model, planning to retain only about 30% of its own parent stock and operate all other stages in-house within a closed loop. Its approach has now changed: going forward, it will focus on two core, high-value segments—grandparent breeding and prepared foods—while making full use of market resources in the parent-stock and commercial-stock segments. It has invested nearly 5 billion yuan to build a prepared-food factory in Taian. After more than a decade of in-depth development, sustained investment and losses, some of its factories are only now gradually becoming profitable and establishing a viable operating model. This illustrates that the prepared-food sector requires substantial investment and has a long payback period, but its earnings are far more stable than those of midstream livestock farming at the bottom of the cycle.
 
　　Breeding: Shengze 901 has achieved domestic substitution and a breakthrough in exports. At the grandparent breeding level, the substitution of domestic breeding stock is accelerating. Shengnong Development’s independently bred “Shengze 901” passed national approval in 2021 and filled the gap in domestic white-feather broiler breeding stock. In 2026, 6, the first batch of 2 grandparent breeding birds was exported in bulk to Uzbekistan, marking a shift for domestic breeding stock from “import substitution” to “reverse exports.” Yantai alone keeps 40 grandparent broiler breeders, accounting for 25% of the national total. Breeding is the upstream-most barrier segment of the smile curve; control of breeding stock means control of pricing power.
 
　　Cooked products: A net-export pattern has taken shape, with the share of further-processed products rising. In the cooked-products segment, China exported 68.26 ten thousand tonnes of chicken in the first half of 2026 year, up 52.75% year on year, reaching a record high for the first half of a year; imports were 34.34 ten thousand tonnes, down 28.06% year on year. Net exports for the first half of the year were approximately 34 ten thousand tonnes, marking China’s formal transition from a net chicken-importing country to a net chicken-exporting country. The share of further-processed prepared products and cooked products in exports continued to rise. Although imports and exports together accounted for only approximately 2% of total domestic chicken consumption and could not support the cycle, exports are serving as a marginal buffer and absorbing domestic excess capacity.
 
Table 4: The Smile Curve and Strategic Positioning of the White Broiler Chicken Industry Chain
 

Session

Profitability characteristics

Competitive barriers

Corporate strategic choices

Great-grandparent breeding

High margins and strong pricing power through the cycle

Breeding technology and barriers to seed sources

Focus on retention, core assets

Parent stock farming

Moderately profitable, highly volatile

Funding and management capabilities

Open collaboration, without taking everything on ourselves

Commercial livestock farming

Low-margin, cyclical losses

Cost efficiency management

Coordinate with the market for standardized output

Slaughter and processing

Low profit margins or losses, with significant inventory pressure

Scale and Channels

Build the ecosystem together, fostering fair coexistence

Deep processing of prepared foods

Long-term investment, stable profitability

Brand, channels, and R&D

Significant investment, long-term commitment
 
　　Compiled from publicly available industry information and public statements on corporate strategy by companies such as Wellhope Foods.
 
　　Five. The truth about production capacity: the huge gap between official data and estimates inferred from feed
 
　　The “black box” of nearly ten million tonnes of output. A key piece of information disclosed by the industry when receiving leaders from the Ministry of Agriculture is that official statistics put poultry meat production at approximately 2900 ten thousand tonnes (the National Bureau of Statistics reported 2837 ten thousand tonnes for 2025), while estimates based on the feed side put actual production as high as around 3800 ten thousand tonnes. The gap between the two measurement bases is nearly ten million tonnes, close to one third of the officially reported figure. The root of this discrepancy is that a large number of small and medium-sized farming operations and independent farmers are not included in official statistics, while feed sales are a hard indicator that more closely reflects actual production capacity.
 
Table 5 Comparison of poultry meat production measurement methods
 

Statistical methodology

Annual output of 2025

Year-on-year growth rate

Data source

Official wording from the National Bureau of Statistics of China

2837 ten thousand tons

+6.7%

National Bureau of Statistics Statistical Communiqué for the Year 2025

Feed-side back-calculation basis

Approximately 3800 ten thousand tons

—

Industry association and enterprise estimates

Differences in measurement criteria

Approximately 960 ten thousand metric tons (approximately 25%—30%)

—

Primarily uncounted individual producers and small- to medium-capacity producers
 
　　Data sources: National Bureau of Statistics, “Statistical Communiqué on the 2025 National Economic and Social Development”; industry association and company interview data.
 
　　Coordinated regulation of the pig and poultry sectors has been put on the agenda. This data gap directly points to a policy direction: regulating pig production capacity alone is far from enough; coordinated adjustments across the pig and poultry industries are essential. Authorities have recognized that actual poultry meat production capacity is far higher than the statistical figures indicate. If pig production is regulated while poultry meat capacity is allowed to expand, the overall oversupply of meat cannot be fundamentally reversed. Coordinated regulation can give businesses across the entire industry room to survive.
 
　　The “scale above all” mindset is the root cause of overcapacity. At its core, the domestic livestock farming industry has long been driven by an expansionary “scale above all” mindset—a path dependency that has taken hold over decades among both government and businesses, with a focus solely on scale and expansion, making proactive industry adjustments extremely difficult. Capacity reduction in the hog industry has been “passively cleared” through 14 months of sustained losses and combined first-half losses of more than 210 billion yuan at 23 listed hog companies. Although the white-feather broiler industry has not yet reached this degree of severity, the supply base in 2025, when all five indicators hit record highs, means that capacity reduction will also take time.
 
　　Six. Market outlook: short-term bottoming; look to the cyclical window in 2027
 
　　Short term: Bottoming-out continues. Short term (2026–9 12): Bottoming-out continues, and prices still have room to fall. The transaction center for parent-generation chicks may fall to 35–37 yuan/set, while commercial-generation chicks may decline further to around 2.05 yuan/bird, and breeding poultry companies will continue to incur losses. Market stabilization requires two hard conditions to be met simultaneously: first, the month-on-month decline in commercial-generation chick output must widen to more than 5%; second, broiler prices must rebound above the breeding cost line (approximately 3.6 yuan/jin). Meeting only one condition is unlikely to break the current negative feedback loop.
 
　　Medium term: Focus on the cycle reversal window in Q2 of 2027. Medium term (the first half of 2027): If grandparent stock imports continue to remain weak and average monthly imports stay below 40 ten thousand sets, then, given the 18-month production-capacity transmission cycle (grandparent stock → parent stock → commercial stock → broiler chickens), commercial stock supply is expected to contract materially in the second quarter of 2027, creating a potential cycle reversal window for the industry. However, it is important to be cautious: grandparent stock farms have limited willingness to cull older breeding chickens, and capacity exits lag losses significantly, which may prolong the bottoming-out period.
 
　　Long term: value differentiation will accelerate. In the long term, China’s white-feather broiler industry has core global competitiveness—chicken exports reached a record high in the first half of 2026, domestically bred grandparent stock was exported in commercial quantities, and efficiency across the entire industry chain continued to improve. The industry as a whole remains on a growth trajectory. However, all industry participants must remain level-headed and restrained, and abandon the mindset of expanding rapidly without due consideration. Industry differentiation will accelerate: companies with leading cost efficiency, a focus on high-value segments, the ability to process ready-to-eat products further, and control over their own breeding stock will be better positioned in the next cycle. Meanwhile, capacity reliant on midstream farming and slaughtering, without the ability to differentiate, will be phased out faster amid continued losses.
 
Conclusion
 
　　The pig industry has taught the entire livestock sector a lesson through 14 months of sustained losses and listed pork companies' first-half losses exceeding 210 billion yuan: there is no shelter in “scale” when facing an efficiency gap. Although the white-feather broiler industry as a whole is currently still marginally profitable, the fact that all five supply indicators reached record highs in 2025, the entire farming sector was loss-making from 9 to 10 month, and the pressure from overcapacity of more than 40 hundred million birds in Shandong has become fully apparent all indicate that the industry is at a critical turning point.
 
　　The cost and efficiency battle of the first half is far from over, but competition over structure and value in the second half has already begun. Focusing on grandparent breeding and further processing of ready-to-eat products, opening up midstream farming to cooperation, and judging success by product quality rather than farming methods are becoming shared principles among leading companies. If coordinated production capacity adjustments across pigs and poultry are genuinely implemented, they will give the industry more room to operate sustainably. For industry participants, acting rationally and with restraint, operating steadily, and adjusting to prevailing trends is not conservatism, but the only certainty in navigating the cycle.