Why are hog prices still unable to rise despite a sharp reduction in the breeding sow herd in the third quarter?

As 10 approaches its latter part, the authorities recently released hog data for the end of the third quarter. Among the figures, the closely watched breeding sow inventory fell to 3602 ten thousand head at the end of the third quarter, down 10.7% year on year and 4.7% from the end of the second quarter. The breeding sow inventory fell to 96% of the normal reserve level, which also means that significant progress has been made in the phased reduction of hog production capacity!

However, a sharp decline in the breeding sow inventory does not mean that fewer market hogs are being shipped for slaughter. Based on the hog-fattening cycle, changes in the breeding sow inventory have a significant impact on the supply of market hogs 10 months later. Although the breeding sow inventory fell to 3602 ten thousand head at the end of the third quarter of 2026, this may lead to a substantial reduction in the volume of standard-weight hogs shipped for slaughter 10 months later. However, current market hog slaughter volumes in 2026 10 are determined by the breeding sow inventory 10 months earlier (at the end of 2025). Data show that the breeding sow inventory stood at 3961 ten thousand head. Although it fell below 4000 ten thousand head, production capacity is in a reduction cycle.

However, the inventory remains high, and a decline in the breeding sow inventory does not mean that the number of newborn piglets has fallen. After all, as hog-fattening operations in China have become more concentrated, production efficiency among farming businesses has improved significantly. At present, the PSY value of breeding sows at leading mainstream Chinese pig companies has reached 25~30 head, with some leading pig companies even reaching 32 head. The number of piglets produced per sow has increased significantly, offsetting the impact of reduced sow production at the end of last year. At this stage, the supply of market hogs is still being released at a high level!

According to monitoring by industry institutions, Zhuochuang data shows that the planned marketings of commercial pigs by large-scale pig enterprises in 10 month increased by 2.45% month over month, while monitoring data from Mysteel shows that the marketing plan for 10 month increased by 1.91% month over month. Planned hog marketings are at a high level this month, and production capacity is in a phase of continued release!

Unfortunately, the consumer market continues to show a peak season that has failed to materialize. Marginal demand lacks strong support, and the seasonal recovery in demand is weak! In particular, hog marketings are increasing, weights are rising, and frozen pork inventories remain high. Under these multiple pressures, downstream market participants are mostly cautious, slaughterhouses have insufficient capacity to take in hogs, and production and sales remain imbalanced!

Based on this analysis, with supply increasing and demand decreasing, hog prices have fallen sharply beyond rational levels. Since the start of this month, the hog market has slumped, with prices for standard-weight pigs falling below 9.5 yuan/kg and the price center continuing to decline! According to monitoring data, in response to changes in supply and demand, the average hog marketing price across 7 monitored production areas in northern and southern China is expected to be 9.40 yuan/kg on 10 month 24. Going forward, attention should be paid to changes in the pace of supply and demand, particularly changes in slaughterhouse operating rates and the pace of marketings by producers!