Second-stage fattening enters the market, and the price spread between standard and heavyweight pigs widens! Pig prices are no longer falling, but a sustained upward trend is still a long way off?

The pig market, quiet for a long time, is finally showing signs of movement.

 

It is not a sign of a sharp price increase, nor a sign of a market reversal, but a different signal—one that comes earlier, is subtler, and is easier to overlook: someone has started stepping in to buy pigs at low prices.

 

Picking up where we left off, we discussed an important development: the price spread between standard pigs and heavier pigs has turned positive and continues to widen.

 

This is a remarkable signal, meaning the dark days of large pigs flooding the market are finally over.

 

Previously, pig prices plunged, and producers everywhere were selling off large pigs. For a time, large and small pigs fetched the same price, and the price difference between standard-weight and heavier pigs was even temporarily inverted.

 

With hog prices stabilizing for several consecutive days, market sentiment finally began to recover, and farmers stopped selling pigs so frantically. Supply contracted, and with activities such as curing meat starting up in some regions, prices rose.

 

In some regions, the price spread between standard and heavyweight hogs continued to widen, prompting secondary fattening operations to become active again. Reportedly, some regional operators are very active in secondary fattening and have started buying large hogs weighing 130 to 140 kilograms.

 

In my view, this matters more in practical terms than whether the price rises by a cent or two and how much capacity has been reduced.

 

 

Why do I say that?

 

After all that effort, hog prices rose by just one or two cents, which really doesn’t tell us much. And this is still the national average, but hog prices vary from region to region, so it’s hard to draw conclusions from the national average.

 

As for reducing production capacity, people have been talking about it for years. But after all the talk, hog prices still fall as usual. And reducing production capacity is relevant to future hog prices, not prices right now.

 

But secondary fattening is different; it directly affects the near-term market. Hog prices have been stable for several days, and with secondary fattening entering the market, the bottom has basically been firmly established.

 

So the first signal is that hog prices can no longer fall.

 

Why have hog prices plunged?

 

The main reason is that there are too many hogs. More importantly, not only are there too many hogs, but they are also being sent to market all at once, which has caused prices to plummet.

 

But now the second-fattening trade has emerged, diverting some hog supplies, so the market is under less pressure.

 

The second signal is that consumption is picking up, although only slightly.

 

The operating rate of slaughtering enterprises is 33%, up by 2 percentage points from the previous week. Although it is still far below the earlier level, any improvement is a positive signal for the current hog market. It indicates downstream demand, especially for cured meat and sausage stuffing—demand the market has been eagerly awaiting for a long time.

 

In fact, curing has indeed begun in some regions, and prices for large hogs have risen. This is the earliest sign of demand.

 

Although it is weak, a spark can slowly grow into a prairie fire.

 

Signal three: emotions have also improved.

 

The few days in early 11 were marked by a frenzy of panic selling, but now that secondary fattening can enter the market, sentiment has improved—it is at least not as panicked.

 

But the arrival of a signal does not mean the market trend is here. It only means prices can no longer keep falling; it does not mean they are about to rise.

 

First, there are still plenty of pigs.

 

Although prices for large pigs have risen and the price spread between standard-weight and large pigs has widened, as mentioned earlier, this does not mean there are fewer pigs. There are still plenty; there is simply a lull after the previous frantic sell-off of large pigs. Overall, pressure from the supply of live pigs remains very high.

 

Moreover, not only are there more pigs, but they are also heavier, and the average weight at slaughter has not come down, so the overall meat supply cannot decline either.

 

On top of that, high frozen-product inventories are all factors capping any market rebound.

 

Second, the ceiling for demand is also coming down.

 

In 2025 year, per capita pork consumption among residents was 26.6 kilograms, down for two consecutive years. Pork's share of meat consumption fell from 62% in 2018 to around 58%. Beef and mutton, poultry, and aquatic products are all drawing away demand.

 

This is not something that changes in a year or two; it changes gradually.

 

So the overall pattern of strong supply and weak demand has not changed, and the hog market remains under pressure.

 

But futures have performed well recently, rising sharply for several consecutive days. Today they rose another 315 points, reaching a high of 9975, with a strong likelihood of returning to the 5-digit range.

 

But it is important to understand that the consecutive sharp rises in futures are mainly due to short covering, not buying pressure from bulls.

 

The Ministry of Agriculture and Rural Affairs previously held a meeting, where it mentioned “promoting the alignment of supply and demand and keeping livestock product prices within a reasonable range.” In the market, this was interpreted to mean that with pig prices having fallen this far, policymakers did not want them to fall any further.

 

So the bears took profits and reduced their positions as prices rose. Once the bears had closed out their positions, this rally would be over.

 

So we should not become blindly optimistic just because prices are rising. It is true that they are no longer falling, but a sustained rise is still a long way off.