Muyuan Foods (002714.SZ; 2714.HK)’s latest disclosed sales update for 9 centers on a single table. One figure is easy to overlook: in 9, Muyuan sold 642.3 ten thousand commercial pigs, generating revenue of 85.20 billion yuan, at an average of 1326 yuan per head.

　　Previously, the company disclosed its latest cost data: the full cost of farming in 8 was approximately 11.5 yuan/kg. Based on an estimated market weight of approximately 128 kg per pig, inferred from the briefing, the cost per pig was around 1470 yuan, and the loss on selling one pig was approximately 140 yuan.

　　This was Muyuan’s position in the autumn of 2026: costs had been brought down to among the lowest in the industry, sales were still growing, the sow herd had been deliberately reduced, and the income statement was still “in the red.”

　　What it is waiting for, and how long it can wait, are among the clues this brief leaves behind.

Volume increased while prices fell

　　The scissor blades are closing, but have not fully closed.

First, let's look at this performance briefing.

Muyuan Foods' sales volume in 9 month increased 15.24% year over year, its average price fell 19.57% year over year, and revenue fell 6.01% year over year. Working backward, the figures for the same period last year were approximately 557 ten thousand head, 12.88 yuan/kg, and 90.6 hundred million yuan. Volume, price, and revenue are mutually consistent, and the data add up. Looking back two years further: in 9 month of 2024, Muyuan sold 501.9 ten thousand market pigs at an average price of 18.65 yuan/kg; this year, sales volume in 9 month was 28% higher, while prices were 44% lower. It should be noted that the market-pig sales reported in the briefing include sales to slaughtering subsidiaries within the group (for example, 246.1 ten thousand head in 3 month), and therefore cannot be added directly to consolidated revenue.
 

Screenshot of a corporate announcement

　　It is clearer when viewed quarterly.

　　In the third quarter, sales of commercial pigs totaled 2011 ten thousand head, generating revenue of 266.7 billion yuan, or approximately 1326 yuan per head. In the second quarter, sales were 2025 ten thousand head, with revenue of 245.7 billion yuan, or approximately 1213 yuan per head—113 yuan more per pig. The average monthly price rebounded from 9.45 yuan/kg in month 4 to 10.36 yuan/kg in month 9, an increase of about 10%, but it was still nearly 18% lower than the 12.57 yuan/kg price in month 1. One more detail: sales in month 9 were 60.7 ten thousand head lower than in month 8. With prices only just showing signs of improvement, Muyuan did not rush to increase sales volume.

　　These figures paint a different picture on the income statement. In 2024, Muyuan's net profit attributable to shareholders of the parent company was approximately 178.8 billion yuan. In 2025, it was 154.87 billion yuan, of which 105.3 billion yuan came in the first half and only approximately 50 billion yuan in the second half. In the first half of 2026, it recorded a loss of 60.78 billion yuan; the first quarter loss was 12.15 billion yuan, and widened to 48.63 billion yuan in the second quarter, with revenue of 594.10 billion yuan, down 22.3% year over year.

　　The problem is not cost, but that prices are falling faster than costs. Muyuan’s full cost fell from nearly 14 yuan/kg in 6 2024 to around 11.5 yuan in 8 this year, a drop of nearly 18%; over the same period, hog prices fell from 18.65 yuan/kg to 10.36 yuan/kg, a drop of 44%.

　　We made a rough estimate: costs in the second quarter were approximately 11.6 to 11.7 yuan/kg, with an average price of approximately 9.6 yuan/kg. The loss per head was approximately 250 yuan; multiplied by 2025 ten thousand head, that amounts to approximately 51 hundred million yuan, broadly in line with the net loss of 48.63 hundred million yuan in the second quarter (slaughtering profits offset part of the loss).

　　For comparison, a researcher at the Chinese Academy of Agricultural Sciences estimated that in early 8 month, the average loss per head for self-bred and self-raised pigs nationwide was between 196 yuan and 234 yuan, while Muyuan’s losses were smaller than the industry average.

　　When will the turning point come:

　　With fewer sows, can pig prices rise?

　　Why aren't pork prices rising?

　　There is overcapacity, and the transmission of capacity reduction has “failed.”

　　At the end of the second quarter, the national breeding sow inventory stood at 3780 ten thousand head, a year-on-year decrease of 263 ten thousand head, down 6.5%, returning to 100.8% of the normal inventory level.

　　However, nationwide hog slaughter in the first half of the year increased by 1.7% year over year, and pork production increased by 3.3%. The reason is efficiency: the industry average number of weaned piglets provided per sow per year rose from 18.3 in 2021 to 24.3 in 2025, reaching as high as 29 to 32 at leading companies.

　　Muyuan tells the same story: at the end of 6, it had 311.3 ten thousand breeding sows, about 9% fewer than the 343.1 ten thousand a year earlier; in the first half of the year, it sold 3861.5 ten thousand pigs, roughly on par with the 3839.4 ten thousand in the same period last year.

　　Prices move forward amid this tug-of-war.

　　In the final week of 8 month, the national average live hog price was 11.55 yuan/kg, down 18.8% year over year, and had risen for three consecutive weeks. Muyuan’s average price for 9 month was down 19.57% year over year, a similar decline, but its absolute value was lower. The two figures use different statistical bases, so only their directions should be compared. At the end of 9 month, the Ministry of Agriculture and Rural Affairs said that the hog price had stabilized above 11 yuan/kg. However, the industry as a whole had been losing money for about 11 consecutive months and remained some way from the industry break-even line of 12 to 14 yuan/kg.

　　There are three views on when the turning point will come.

　　Pig cycleFrom breeding sows to market hogs, it takes approximately 10 months. The number of newborn piglets in 3 this year fell year over year for the first time, corresponding to the contraction in market hogs shipped after 9. The optimists believe this confirms a turning point in the fourth quarter; the pessimists believe that the “hidden capacity expansion” driven by efficiency improvements still needs to be absorbed, and that the supply-demand gap will not emerge until the first half of 2027; the mainstream view lies between the two: “stable at first, then higher, with a modest recovery.” Muyuan’s management expressed a similar view, saying that from the second half of this year through 2027, the underlying trend in hog prices would be a reasonable and steady recovery.

　　Our view is that prices most likely bottomed in the second quarter, but a turning point in profitability still requires two conditions: prices holding steady above 12 yuan/kg, and actual declines in the number of hogs marketed. This is more likely to happen between the fourth quarter of this year and the first half of next year—a gradual slope rather than a V-shaped rebound.

What does it take to stay in the game?

　　Muyuán’s 4 measures

Since it is a gentle slope, the question becomes: who can make it to the top? Muyuan has four ways to do so.

　　The first is cost. In 2022, the company set a target of reducing costs by 600 yuan per pig. As of the end of 5 this year, 323 yuan had been achieved. The best-performing farm and production line had costs below 10.5 yuan/kg, and the full-year target is 11.5 yuan/kg. The remaining 277 yuan, converted based on 128 kg, is approximately 2.2 yuan/kg, giving a theoretical cost-reduction potential greater than the current shortfall of approximately 1.1 yuan. However, the further cost reductions go, the harder they become, so this potential will not be realized easily.

　　Second is production capacity. In 8 last year, Muyuan pledged to reduce its breeding sow population to 330 ten thousand head by the end of the year; at the end of 6 this year, it stood at 311.3 ten thousand head, and the company then proposed reducing it to below 300 ten thousand head by the end of 9; the briefing showed that at the end of 9, it stood at 297.4 ten thousand head, a reduction of 13.9 ten thousand head in one quarter. Fewer sows mean fewer piglets, and fewer hogs available for market several months later. Combined with the month-on-month decline in sales in 9, the figures suggest that in this cycle Muyuan has been more of a leader in contraction than a company that ramps up output as soon as hog prices recover.

　　Third is slaughtering. In the first half of the year, 1723.4 ten thousand pigs were slaughtered, up 51% year on year. Revenue from the meat processing segment was 220.61 billion yuan, up 14.04% year on year, and both the first and second quarters were profitable. In 9, 301.5 ten thousand pigs were slaughtered, accounting for approximately 47% of sales that month; this proportion was approximately 45% in the first half of the year. When livestock farming is loss-making, slaughtering provides a hedge; when hog prices rebound, it becomes a source of additional profit.

　　Fourth is funding. At the end of the first quarter, the debt-to-asset ratio was 50.73%, down 3.42 percentage points from the beginning of the year, and monetary funds amounted to 142.7 billion yuan. The company stated that large-scale capacity construction had largely been completed and that domestic capital expenditure was trending downward. In 7 month, directors and senior executives completed purchases totaling 5 billion yuan, while a separate H-share repurchase plan of 3 to 5 billion Hong Kong dollars was also in place.

　　【Conclusion】

　　Returning to the calculation at the beginning: one pig sells for 1326 yuan, with costs of about 1470 yuan and a shortfall of about 146 yuan. There are only two ways to narrow the gap: keep lowering costs or keep raising prices. Muyuan has control over the former; the latter depends on whether the entire industry actually cuts production.

　　The 9 monthly briefing did not provide an answer, but it did point the way: the sow herd continued to decline, sales fell month over month, and revenue per head remained above 1300 yuan for three consecutive months after bottoming out in the second quarter. At the bottom of the cycle, the question is not who rises first, but who can stay in the game until the gap closes.