1, Farm losses and pig disease disruptions combined to push sow inventories down further in 10
According to data from 196 sample farming enterprises monitored by Zhuochuang Information, the inventory of breeding sows in 10 stood at 832.11 ten thousand head, down 1.09% month on month and 8.21% year on year. The main reasons were ongoing losses in the farming sector, which prompted the active culling of sows, and weak follow-through in replacement gilt restocking. Hog prices continued to hit new lows in 10, and losses among farms that breed their own hogs intensified, accelerating the culling of inefficient sows, including older and low-producing animals. Small and medium-sized farms had weaker cash-flow resilience, making involuntary exits more pronounced. Large-scale farms focused on optimizing herd structure and systematically reducing excess capacity, while also controlling the pace of replacement gilt introductions in response to capacity-control policies. In addition, pig diseases recurred in some regions during the month, prompting some farms to speed up sow culling as a precaution. Market expectations for the peak curing season were subdued; slaughterhouse operating rates fell short of expectations and frozen pork inventories were high. Farm operators remained cautious, with little interest in selecting or restocking replacement gilts. Culling continued to exceed the number of gilts converted into breeding sows, driving inventories down further.
Figure 1: Trend in breeding sow inventories at sample enterprises monitored by Zhuochuang Information (196 enterprises)
Data source: Zhuochuang Information
2, the effects of earlier capacity reductions are becoming evident; hog inventory fell in 10
Data from Zhuochuang Information's monitoring of 196 sample farming enterprises show that hog inventory in 10 was 7757.66 ten thousand head, down 0.48% month over month and down 2.76% year over year. Hog inventory is related to the breeding sow inventory 5 months earlier, when sow inventory was declining. The effects of capacity reductions became evident, corresponding to a decline in fattening hog inventory in 10. However, considering that demand-side improvement in 10 was limited and downstream slaughtering did not increase significantly, farms had difficulty moving hogs. Most did not meet their planned slaughter volumes for the month, and some hogs were forced to be held over for slaughter the following month, weakening the decline in hog inventory in 10.
Figure 2 Hog inventory trends at sample enterprises monitored by Zhuochuang Information (196 enterprises)
Data source: Zhuochuang Information
Sow inventories and live pig inventories may decline again in 3 and 11
Zhuochuang Information expects sow inventories at sampled companies to decline in 11. Although demand for cured pork is gradually picking up in some regions in 11, there is limited room for a rebound in pig prices, and the industry as a whole is expected to remain in the red. Large-scale farms are continuing to optimize their herds by culling high-parity, low-productivity sows and strictly controlling new breeding stock purchases. Small and medium-sized farms are under considerable cash-flow pressure. In addition, as temperatures continue to fall, the risk of diseases such as diarrhea and respiratory illnesses is rising further, and some may be forced to reduce production. Capacity-control measures remain in place, and leading companies have no current plans to expand their sow herds against the market trend. Although cured-pork demand may provide some boost, confidence in the market outlook over the medium to long term is weak, limiting active restocking. Overall, culling is still outpacing replacement, and sow inventories may continue to decline.
Zhuochuang Information expects live pig inventories at sampled companies to decline in 11. The effects of the ongoing reduction in breeding sows are gradually emerging: growth in newborn piglets is narrowing, and weak new restocking on the fattening side is also limiting the increase in market-ready pigs at the source. Demand for cured pork is in its initial pickup phase in 11, but its boost to consumption is limited. The increase in slaughtering provides only slight support, and the consumption of market-ready pigs is unlikely to improve significantly. However, market participants lack confidence in the outlook, and some may accelerate the pace of shipments, potentially driving down inventories of market-ready pigs.
Overall, capacity reduction is ongoing. Sow culling exceeds restocking of replacement gilts, and capacity contraction is gradually being transmitted to finishing pigs. In the short term, seasonal support from the curing season is weak and is unlikely to reverse the industry’s loss-making situation. Pressure on producers to reduce capacity, both voluntarily and involuntarily, remains. Going forward, it will be important to continue monitoring the persistence of sow herd reduction, regional disease developments, and the actual boost to consumption from the curing season. These factors may determine the pace of future contraction in hog supply and the direction of hog prices.