In 2026, the hog industry is undergoing a shift in direction rarely seen over the past ten years. The competition among leading publicly listed pig companies is no longer about "who ships more hogs," but "who is first to bring capacity back in." Muyuan is reducing its sow herd by approximately 50 ten thousand head, Wen’s is shutting down 7 low-efficiency pig farms, and New Hope has explicitly lowered its shipment target... Behind these moves is a systemic contraction in production capacity, jointly driven by deep losses across the industry and tighter policy.
From “expanding capacity” to “reducing capacity”
In the first half of the year, 20 listed pig farming companies reported combined losses of more than 230 billion yuan, of which the three leading companies, Muyuan, Wens and New Hope, accounted for approximately 121 billion yuan in combined losses. Pig prices fell below 10 yuan per kilogram at one point, and the pig-to-grain price ratio entered the first-level warning range for excessive declines. When pig prices remained around 10 yuan per kilogram for an extended period, persistently below the industry average full cost of 12 yuan per kilogram, the old approach of “absorbing losses and waiting for the cycle to turn” began to fail. In its place came a full set of contraction measures, including halting pig farm construction, culling low-productivity sows, reducing slaughter weight, and lowering annual shipment targets.
Unlike in previous cycles, when retail investors were passively squeezed out, this round of capacity reduction is characterized by a clear top-down approach—led by policy and driven by leading companies. Behind the tightening of policy is deep industry-wide losses.
Leading companies were the first to scale back, to varying degrees.
Muyuan was the sample with the largest production cut in this round. Its inventory of breeding sows fell from 362 ten thousand head at the beginning of 2025 to 311.3 ten thousand head at the end of month 6 in 2026, a cumulative reduction of about 50 ten thousand head. Commercial hog sales reached 7798 ten thousand head in 2025, while the sales target for 2026 was set within a range of 7500 ten thousand to 8100 ten thousand head, rather than pursuing one-way growth. Meanwhile, Muyuan halted construction at 124 pig farms under construction, cutting capacity by about 1200 ten thousand head; reduced the average weight of commercial hogs sold from 129 kilograms to below 120 kilograms; and, starting in month 6 of 2025, stopped selling to customers engaged in secondary fattening. Taken together, these measures make its intention to contract unmistakable.
Wens Foodstuff Group Co., Ltd. recorded a net loss attributable to shareholders of the parent company of 43.66 hundred million yuan in the first half of the year, turning from profit to loss. The company closed 7 underperforming pig farms and cumulatively terminated 15 investment projects funded with raised capital, of which more than 9 were pig farming projects. More noteworthy is its innovative approach to reducing capacity: it launched roast suckling pig/suckling pig products with an annual supply of 500 ten thousand head, converting market hogs into processed products earlier for consumption and avoiding keeping them in pens to gain weight. It also stopped issuing livestock transport and quarantine certificates for market hogs, restricting secondary fattening.
New Hope will reduce its number of breeding sows from 76 ten thousand head to 74 ten thousand head, explicitly lowering its target for market hogs sold in 2026 to approximately 1600 ten thousand head, and setting an annual target to reduce its full cost by 1 to 1.5 yuan/kg. Although the three leading companies are taking different approaches, their direction of contraction is highly consistent.
Mid-sized pig farming companies decisively follow suit, and expansion cools across the board
The adjustments by small- and medium-sized listed pig farming companies were more direct and decisive. DBN terminated the Yutian Research and Experiment Center project; Aonong Bio exited the northern market and halted all new projects under construction; Tangrenshen terminated 4 projects under construction; Tech-Bank Food phased out 15 inefficient fattening farms; Tiankang Bio halted its Gansu project for 30 ten thousand piglets; and the fundraising scale of Giantstar Farming and Animal Husbandry was sharply reduced from 17.5 hundred million yuan to 2.27 hundred million yuan, with only 1 of its 9 fundraising projects retained.
The overall industry’s “cooling” can also be seen in the financial data: as of the second quarter of 2026, construction in progress at publicly listed pig farming companies had decreased by 23.9% year over year, fixed assets had turned to a year-over-year decline, and productive biological assets had contracted slightly. The industry’s expansion of physical production capacity had essentially come to a halt. In other words, the entire industry has shifted from the momentum of “land-grabbing” in the previous cycle into a phase of capacity reduction.
Capacity targets shift, with an analysis of the cycle outlook
Looking back, confirmation of a cyclical turning point still requires key conditions to materialize.
First, the national breeding sow population of 3780 ten thousand head is nearing the new red line of 3750 ten thousand head. However, because of improved farming efficiency, supply capacity is being reduced relatively slowly, and a substantial narrowing in market-ready hog production resulting from capacity adjustments is expected to become apparent only in 2027.
Second, although the peak season for cured meat in the fourth quarter provided support, high frozen pork inventories and diversion to substitutes limited the scope for a rebound in pork prices.
Third, the core indicator determining an industry turning point is not the inventory figure under the policy definition, but whether hog prices can regain a stable position above the industry cost line. Muyuan's cost anchor is 11.5 yuan per kilogram, the industry average is approximately 12 yuan per kilogram, while hog prices have spent most of the time in the range of 10 to 11 yuan, and the price gap has not yet been recovered.
This means that the current round of capacity reduction led by leading companies may continue for some time. For livestock farming companies, the competition comes down to who can drive costs lower and control capacity more precisely. For the industry as a whole, a genuine signal of reversal will still have to wait until the gap between hog prices and costs is truly closed.
From “racing to expand capacity” to “collectively hitting the brakes,” pig farming companies’ losses of real money in 2026 have brought a renewed respect for the cycle. The rational return of production capacity may be painful in the short term, but in the long term, it could mark the beginning of the industry’s escape from the vicious cycle of “the more it loses, the more it produces; the more it produces, the more it loses.” Whether oversupply can now be reversed remains to be seen, but at least the industry has taken its first step toward turning around.