In late 10 month, the national average price of live pigs fell below 10 yuan per kilogram, and the benchmark live hog futures contract 2701 also fell below the ten-thousand-yuan mark. Even the traditional peak consumption season of “Golden September and Silver October” failed to support pig prices. Why has the seasonal price-increase logic failed?
According to past cyclical patterns, falling hog prices force supply to contract, creating the prospect of prices stabilizing and recovering. This time, the market has had to wait longer. This “hog cycle” has been “bottoming out” for an extended period, with the prolonged downturn now lasting more than 40 months.
In addition, the current number of breeding sows has fallen below the normal inventory level. Why has the benefit of capacity reduction not yet shown up in hog prices? And how much longer will this prolonged “bottoming out” last?
Pig prices have fallen below the “10 yuan range,” breaching the industry’s full cost line
For the pig farming industry, this year’s “Golden September and Silver October” did not fulfill widespread expectations.
Data show that since 9, live hog prices have fluctuated downward, and the Mid-Autumn Festival and National Day holidays failed to provide a noticeable boost. After 10 month 14, the national average live hog price remained below 10 yuan per kilogram.
“After live hog prices fell below 10 yuan, they kept sliding.” An industry observer in live hog farming told the reporter that this year’s market performance exceeded the expectations most industry participants had at the beginning of the year. “In previous years, prices were usually higher in 9 and 10, especially in 9, but this year has been very disappointing.”
Spot prices are subdued, and the futures market is also under pressure. In late 10, the most-active live hog futures contract 2701 fell below the ten-thousand-yuan mark, closing at 9860 yuan/ton on 10 22, setting a new low since the contract was listed. The continued weakness in the futures market signals cautious expectations for the short-term market.
The most-active live hog contract 2701 hit a record low. Source: Wind
More challenging still, spot prices for live hogs have already fallen below the full cost line. Taking Muyuan Foods as an example, the full cost of raising live hogs in month 9 was slightly below 11.5 yuan/kg.
Operating pressure has begun to emerge. Wens Foodstuff Group’s third-quarter report shows that revenue for the first three quarters was 721.97 hundred million yuan, down 4.74% year on year; net profit attributable to shareholders of the parent company was a loss of 49.61 hundred million yuan, turning from profit to loss. The company attributed this to a sharp decline in hog prices, resulting in substantial losses in its pig farming business.
Behind the data lies a typical industry predicament: rising volume and falling prices, with revenue increasing but profits not. From 7 to 9, Wens's pork hog sales increased from 274.21 ten thousand head to 298.83 ten thousand head, and sales revenue rose from 36.62 hundred million yuan to 40.56 hundred million yuan. However, the average sales price of live hogs hovered at around 10.8 yuan per kilogram, down 18.44% year over year in 9.
The same is true of other leading companies. Muyuan Foods sold 642.3 ten thousand commercial pigs in 9 month, up 15.24% year on year, but the average selling price was only 10.36 yuan per kilogram, down 19.57% year on year. At self-breeding farms monitored by Yongyi Consulting with 5000–10000 sows, the loss per head last week had reached 259.97 yuan, and the entire industry is under pressure.
Another consequence of persistently low prices is that the industry is undergoing accelerated consolidation. As prices remain depressed, small and medium-sized independent farmers are exiting more quickly. Although leading companies are proactively reducing capacity, they are still maintaining large slaughter volumes, and the industry’s Matthew effect continues to become more pronounced.
In fact, hog prices have not been in a prolonged slump; they have undergone two rounds of modest increases since the beginning of the year. Data from China Pig Farming Network show that at the start of the year, live hog prices were still in the range of 11–12 yuan/kg; after falling to the annual low of 8.81 yuan/kg on 4 month 13, they rebounded slightly, reaching a period high of 11.3 yuan/kg in 7 month; after 9 month, prices began a “second bottoming out,” and in late 10 month fell again to below 10 yuan.
“Whenever prices fluctuate slightly, they soon fall again, making it difficult to sustain an upward trend.” Many people in the aquaculture industry share this sentiment. The summer holiday period, Mid-Autumn Festival, and National Day—consumption occasions that had originally inspired high hopes—were all unable to support a substantial, sustained rebound.
The Counterintuitive “Bottoming Out”: Efficiency Gains “Eat Up” the Benefits of Capacity Reduction
Why does every small rise fail to hold? The reason still comes down to the supply side.
As of the end of the third quarter, the national live pig inventory stood at 42533 ten thousand head, down 2.6% year over year; the breeding sow inventory stood at 3602 ten thousand head, a decrease of 433 ten thousand head year over year, a decline of 10.7%, and had fallen to 96% of the normal holding level of 3750 ten thousand head.
However, during the same period, the country slaughtered 53739 ten thousand pigs, up 1.4% year on year; pork production was 4508 ten thousand tons, up 3.2% year on year. The number of sows in inventory fell, while pork production increased, showing a clear industry trend of “fewer sows, no reduction in pork production.”
This is the most counterintuitive part of this hog cycle: the year-on-year number of breeding sows in stock fell by 10.7%, yet hog prices are still hovering near the bottom. Policy support has increased, and herd reduction has accelerated. Why is the hog cycle still “grinding along at the bottom”?
The root cause of the change is a systematic improvement in breeding efficiency. Simply put, although there are fewer sows, they are more productive, and each pig provides more meat.
PSY, or the number of weaned piglets provided by each sow per year, is a key indicator of sow reproductive efficiency. The observers cited earlier said, “Over the past few years, as breeding, feeding and management, and disease prevention and control have improved, the industry’s PSY has risen from 18–20 previously to around 25, with some highly efficient farms even reaching 28–30.” Pioneer Futures estimates that industry PSY has risen from 19.5 to 24.3, an increase of 24.6% cumulatively, enough to substantially offset the decline in the number of breeding sows.
Slaughter weight is also rising. “Before African swine fever, the average weight of pigs at slaughter was around 100 kilograms; last year it had already increased to 126 kilograms,” the aforementioned observer said. “An extra 20 kilograms per pig represents an increase of 20%.”
The latest data continues to set records. According to statistics from Shenyin & Wanguo Securities, the average weight of pigs marketed across the industry reached 129.34 kilograms last week, the highest level for the same period in nearly five years. Against the backdrop of accelerating declines in pig prices, this means that some pigs are being held back from sale involuntarily, and the subsequent supply pressure still needs to be released.
Image AI-generated. Keywords: pig farm, live pigs
Beyond efficiency, production capacity adjustments themselves also involve time lags that cannot be compressed.
“Pig farming is the production of living organisms; it is impossible to stop production simply by pressing a pause button, as one would with industrial products.” The aforementioned observer explained that a sow’s gestation period is about 4 months, piglets take about 6 months to reach market weight, and it usually takes around 10 months from reducing the sow herd to bringing market hogs to market.
This means that the hogs currently on the market still correspond to sow production capacity from the end of 2025 to the beginning of 2026. The reduction in the number of breeding sows did not accelerate significantly until after the second quarter of this year, and the resulting impact will not begin to gradually feed through to market hog numbers until the second quarter of 2027 at the earliest.
Changes in industry structure are also lengthening the bottom of the cycle. When small-scale farmers accounted for a higher share in the past, pig prices falling below the cost line would trigger rapid exits, followed by a contraction in supply. Today, leading companies have stronger financial resources and cost-control capabilities. Even when they incur temporary losses, they can stay in business through financing, cost reductions, and more refined management. Fitch Ratings has also noted that livestock companies are better able to withstand losses financially, which may instead delay the clearing of excess capacity and prolong the downturn.
In addition, demand has likewise failed to provide sufficient support. “Consumption patterns have basically not changed. The domestic pig industry still mainly sells carcasses and fresh pork, while further processing and the development of niche products remain inadequate. No incremental consumer demand sufficient to absorb the additional supply has yet emerged.” In the view of the aforementioned observer of the pig farming industry, amid an imbalance between supply and demand, prices naturally lack the impetus for a sustained rise.
How long will the “bottoming out” last? The turning point may come in 2027
How long will the “bottoming out” last? This is the question the entire industry is asking.
“In the short term, there is a chance of a temporary rebound in stocking up for the Spring Festival before year-end,” said the aforementioned observer of the hog farming industry. However, neither the scale nor the staying power of this rebound should be overestimated. On the one hand, overall hog inventories remain high, and heavier hogs held back from slaughter earlier are still being released to the market in succession. On the other hand, frozen pork stocks will also be released in a concentrated way during the peak consumption season, adding to market supply.
Image generated by AI. Keywords: wet market, pork
Zhuochuang Information expects both supply and demand in the pork market to increase in the fourth quarter, with supply rising more significantly. In particular, demand may drive a low-level rebound in 11月, with the monthly average price increasing by approximately 5%—8%, though it is unlikely to exceed 15元/kg. In 12月, as the improvement in demand weakens and hogs are released onto the market in concentrated volumes, prices may edge down again. Guojin Securities also stated that seasonal supply may decline somewhat, but the overall volume will remain relatively high. Short-term pressure on hog supply will persist, and combined with the seasonal off-season, hog prices may have further room to fall after rebounding.
A genuine trend inflection point may not emerge until the first half of 2027.
“Low prices may persist for some time, with conditions possibly improving by next year,” said an industry observer in pig farming, who expressed a similar view. “The effects of capacity reduction may not become apparent until March or April next year, or even June or July.”
Shenyin & Wanguo Securities believes that, after nearly 3 and a half months, live hog prices have once again fallen below the 10-yuan threshold, marking the start of a “second bottoming out,” with capacity reduction expected to accelerate again. To date, the live hog farming industry as a whole has been operating at a loss for four quarters, and the financial strain on farms and producers continues to accumulate, while the reduction in production capacity of breeding sows continues. We remain optimistic about the sustainability of the upward phase of the hog cycle in 2027 and the potential for hog prices to rise. The cycle’s turning point is drawing closer.
However, even if the next bull cycle arrives, it may not replicate the explosive rallies of the past.
“On the one hand, as breeding efficiency has improved, the industry's equilibrium production capacity has shifted upward, and supply elasticity has increased significantly. On the other hand, with the rising share of large-scale enterprises, fluctuations in the industry's production capacity will become more moderate, and the pronounced ups and downs of the hog cycle will gradually be reduced,” said an observer of the hog farming industry.
For aquaculture businesses, simply waiting for prices to rebound is clearly not the best option.
“The key is to improve efficiency through management; we cannot rely solely on prices to make money,” said the aforementioned observer of the hog farming industry, highlighting the core direction of the industry’s transformation. “The hog industry chain is long, and some hog companies have also achieved good results through refined management and extending their industry chains.”
The industry’s profitability baseline remains, but more profits will flow to companies with lower costs and more efficient management. “During the rapid expansion after African swine fever, some companies still expanded with low-quality capacity, and cost disparities across the industry remain significant.” Guojin Securities believes that “as inefficient capacity gradually exits, leading companies still have considerable room to release excess profits.”
The bottom of the pig cycle is both a painful period of industry reshuffling and a window for companies to build their capabilities. A turning point in prices will eventually arrive, but before it does, strengthening internal capabilities is what truly enables a pig-farming company to weather the cycle.