In the second half of 2026 through the first quarter of 2027, pork prices are expected to rise moderately. As capacity clears at an accelerating pace, the projected peak of the next cyclical upturn may be revised upward.
Since month 9 of year 2025 (month 10, day 24), the hog farming industry has been suffering losses for more than 12 months, setting a record for the longest period of losses in history. According to China Pig Network, on month 10, day 16, the national price of live hogs (three-way crossbreeds) was 9.88 yuan/kg, falling below the 10-yuan threshold. Meanwhile, the Mid-Autumn Festival and National Day holidays did not bring the expected rebound: after briefly recovering from 10.06 yuan/kg at the end of month 9 to 10.31 yuan/kg on month 10, day 6, hog prices turned downward, and the live hog market showed “a peak season without a peak.”
However, the secondary market moved in the opposite direction, with pork concept stocks gaining collectively on 10 month 19 and 10 month 21. The reasons behind this countertrend rally are as follows: first, the duration of losses has reached a new historical record, with cash flow pressures nearing a critical point; second, capacity reduction has entered the “deep-water zone,” and willingness to replenish stocks has fallen to a nadir; third, the current market capitalization per head of livestock for various hog farming companies is at a historically low percentile, providing a relatively high margin of safety, while the sector’s valuation risk-reward ratio is improving.
Hog prices bottoming out after hitting a ten-year low
The hog price trend in 2026 can be summed up as “sharp decline—bottoming out—bottom-building”: at the beginning of this year, the national average live hog price was about 12.78 yuan/kg. After the Spring Festival, the market entered the traditional off-season for consumption, while the concentrated release of capacity built up earlier at high levels further accelerated the decline in pork prices. In early 4, the national average price of live hogs of the three-way crossbreed variety fell to 8.67 yuan/kg, a new low in nearly ten years.
On 4 month 28, the Politburo meeting explicitly called for “stabilizing the prices of agricultural products such as live pigs,” and the market judged that a policy floor had emerged. Afterward, pork prices stabilized and saw a slight rebound, fluctuating within a narrow range of 9 yuan/kg to 10 yuan/kg from 5 to 6. In early 7, driven by the entry of secondary fattening and sentiment favoring holding back sales, pig prices briefly rebounded to 10.90 yuan/kg (Yongyi Consulting), but then fell again. Most recently, on 10 month 16, the national price of live pigs (three-way crossbreeds) was reported at 9.88 yuan/kg, once again falling below the 10-yuan threshold.
The reason for the decline in pork prices lies on the supply side. According to the National Bureau of Statistics, in the first half of 2026, the country’s slaughtered hogs totaled 37246 ten thousand head, an increase of 627 ten thousand head year on year, or 1.7%. “The number of breeding sows in stock remained at a high level of more than 4000 ten thousand head for an extended period in 2025, corresponding to a peak in the supply of commercial hogs in the first half of 2026,” Shenwan Hongyuan noted in a research report.
At the same time, the continued improvement in production efficiency across the industry has further exacerbated supply pressure. According to Shenwan Hongyuan’s statistics, the industry’s PSY (pigs weaned per sow per year) rose from 2023 years’ 22.7 pigs to 2025 years’ 24.3 pigs. Leading companies generally exceeded 24 pigs, and some frontrunners even reached 29 to 32 pigs. In 9 month, Hualian Futures also noted in its quarterly hog report: “Improved production efficiency offset some of the effects of capacity reduction. The actual number of hogs marketed remained high, putting some downward pressure on price increases.”
Furthermore, the demand side is also far from encouraging. Monitoring data from Mysteel show that operating rates at sampled domestic slaughtering companies remain low, sales of fresh pork carcasses have slowed, and frozen-product inventory capacity utilization is high compared with the same period. In addition, Changjiang Securities noted in its review of the 2026 interim report that the marginal decline in total pork consumption in 2026 was significantly greater than in 2023.
Significantly increased capacity reduction
The breeding stock continues to decline
The other side of weak prices is a marked acceleration in capacity reduction.
According to the National Bureau of Statistics, at the end of the second quarter of 2026, the national stock of breeding sows fell to 3780 ten thousand head, a year-on-year decrease of 263 ten thousand head, or 6.5%, with the decline widening by 3.2 percentage points compared with the first quarter. On a quarter-on-quarter basis, the reduction in the second quarter alone was approximately 3.2%, accelerating markedly from 1.4% in the first quarter. From the peak of the current cycle—in 1 2023, when the stock stood at 4367 ten thousand head—the cumulative reduction was approximately 13.4%.
Data from third-party institutions also corroborates this trend. Sample data from Yongyi Consulting show that the number of breeding sows fell by 1.33% month over month in 2026 year 6 month (it was -1.1% in 5 month); sample data from Shanghai Metals Market show a month-over-month decline of 0.98% (it was -1.32% in 5 month). Dongxing Securities also noted in its monthly tracking report that smaller and medium-sized farming households are reducing capacity significantly faster than large-scale enterprises, and that the exit of smallholders is still accelerating.
Multiple factors are driving the accelerated liquidation: first, sustained and severe losses. According to a research report by Hu An Securities, since 2025 year 9 month, self-breeding and self-raising of live pigs has generally been in a loss-making state. As of 2026 year 7 month 19 day, the industry’s average loss per head was 149.9 yuan for self-bred and self-raised pigs and 129.47 yuan for piglets purchased externally.
Second, piglet sales have also fallen into losses. According to data from Guosen Securities, the recent average price of 7-kilogram piglets fell to around 182 yuan per head, down 56% year on year. Sales of piglets to outside buyers are all loss-making, which may drive a further intensification of market-driven capacity reduction. The average piglet price in 9 was 16.3 yuan per kilogram, down 6.6% month on month.
Third, culling of sows accelerated. Data from Yongyi Consulting show that during the week from 6 month 26 to 7 month 2, the discount price for culling high-parity sows fell to 68.8%, down a cumulative 9.5 percentage points from its mid-5 peak; the discount price for culling low-parity sows fell to 78.01%, down a cumulative 9.4 percentage points. Hu’an Securities commented that the willingness to cull sows had increased noticeably.
More importantly, the industry is already showing tangible signs of clearing out. A research report by Hu’an Securities disclosed: “As of early 7, mid-sized companies with annual output of 30 ten thousand to 80 ten thousand head have already gone bankrupt. Veterinary drug companies report mounting pressure on receivables collection, with overdue payments increasing markedly.” Changjiang Securities also revealed during a conference call in 9: “Three listed pig farming companies already have asset-liability ratios exceeding 80%.”
The biggest difference between this cycle and previous ones is the unprecedented strength of countercyclical policy measures.
On 5 month 14, the Ministry of Agriculture and Rural Affairs issued the “Implementation Plan for Comprehensive Regulation of Hog Production Capacity (2026 Revision),” lowering the normal national inventory of breeding sows from 3900 ten thousand head to 3750 ten thousand head. This is the first lowering of the normal inventory target since 2024 year 2 month. The plan proposes a three-tier approach: “adjust sow numbers over the long term, piglet numbers over the medium term, and finishing hog numbers over the short term.” The warning ranges have been narrowed across the board—the green zone has been narrowed from 92% to 105% to 92% to 103%, meaning that smaller fluctuations in production capacity will trigger warnings and regulatory measures.
CITIC Securities stated that policy constraints are continuing to strengthen and the effects of regulation are gradually taking hold. Combined with the possible impact of extreme weather, capacity reduction is expected to continue in the second half of 2026, and hog prices are expected to be favorable in 2027.
Warmth is rising
Pork prices have bottomed out
Based on the above analysis, multiple institutions believe the current hog cycle is nearing the end of its bottoming phase.
In its commodities outlook for 6月, CICC concluded: “The bottom is in, policy support is in place, and conditions are gradually warming.” It believes that hog prices may rise moderately from the second half of 2026 through the first quarter of 2027. In its interim report summary for 9月, CITIC Securities maintained its “Recommend” rating: “Given that the industry’s fundamentals have passed the bottom and expectations of a reversal have strengthened, we continue to recommend this sector.”
From a valuation perspective, the live pig farming sector is currently at a historically low level. According to Wind statistics, as of 10/19, the current price-to-book ratio of the Shenwan Live Pig Farming Index (850172.SI) is 2.82 times, at approximately the 19.8th percentile over the past ten years. This means that the current valuation is lower than it was for approximately 80% of the past ten years, placing it at a historically low level.
Hu'an Securities pointed out that after a short-term rebound in pig prices, they are expected to resume bottoming out later. As the number of pigs held for secondary fattening continues to increase, pig prices will fall. China Post Securities was relatively cautious, noting that hog supply may decline quarter on quarter in the third and fourth quarters, but this is unlikely to reverse the fundamental pattern of supply exceeding demand. It expects that capacity reduction may not take effect until the first quarter of 2027.
GF Securities stated that, based on data on sows, hog inventories, feed, and other factors, it sees opportunities in a future reversal of the hog cycle. Valuations in the sector are currently at historical lows, highlighting its investment value. It favors leading companies with cost advantages. Among large-scale farming companies, it particularly recommends Wen's Foodstuff Group and Muyuan Foods, and suggests keeping an eye on Dekon Agricultural & Animal Husbandry Technology and New Hope. For companies with potential for an operational turnaround, it suggests keeping an eye on ZHENGBANG TECH. Among small and medium-sized farming companies, it recommends keeping an eye on Lihua Animal Husbandry, Tecon Biology, Shennong Group, Tangrenshen Group, and others.
Caitong Securities expects that, judging from production capacity and inventory pressure, the current hog farming industry remains in a phase of oversupply. In the fourth quarter, hog prices may remain at low levels with fluctuations, making a trend reversal unlikely. Against the backdrop of persistently weak industry conditions, the capacity of breeding sows is expected to undergo a substantial reduction. As capacity exits accelerate and are realized, the upside potential of the next cyclical upturn may be revised upward. The recommendation is to take advantage of sector pullbacks to build positions. In terms of investment strategy, place less emphasis on scale growth and greater emphasis on companies’ cost-control capabilities. Key recommendations include Muyuan Foods, Wen’s Foodstuff Group, and Tecon Biology, among others.