On 2026/9/28, New Hope (000876.SZ) issued the Announcement on Conducting Hedging Business. The company and its subsidiaries plan to use futures products related to their principal businesses, including live hogs, soybean meal and corn, to hedge against commodity price fluctuations, and to manage interest rate risk and control overall financing costs through over-the-counter options.
The announcement also stated that the maximum margin occupied by hedging business during 2026–2027 would not exceed 33 billion yuan.
Under the Futures and Derivatives Law of the People’s Republic of China, hedging refers to futures and derivatives transactions that traders enter into to manage risks arising from changes in the value of their assets, liabilities and the like, and that substantially correspond to those assets, liabilities and the like.futures transactionsand derivatives transactions.
“Companies that hedge are mainly those with raw material procurement needs. Considering the price difference between spot and futures, they lock in a forward purchase contract,” a securities industry professional told Southern Weekly. The purpose for companies is not to make money from arbitrage, but to smooth out risk.
Previous announcements show that this is not the first time New Hope has engaged in hedging; other A-share listed pig farming companies were also involved in this business during the same period. According to incomplete statistics, New Hope has conducted hedging five times since 2013, but has not disclosed the amounts. The margin ranged from 1 billion to 8 billion yuan, a relatively small scale.
This time, the margin used will not exceed 33 billion yuan, and the limit has already been raised by 4 times.
On the eve of National Day six years ago, New Hope's share price once broke through its historical high of 42.18 yuan per share. It now stands at only 6.9 yuan per share, and its market capitalization has fallen by 1400 billion yuan. The company recorded a loss of 17 billion yuan in the first half of 2026, approaching its full-year loss in 2025.
1 “Losing money on every pig sold”
As for its financial position, as of the first half of 2026, New Hope had a book balance of 79.63 billion yuan in monetary funds, while net cash flow from operating activities was 16.46 billion yuan, down 68.05% year on year. In addition, the company's total liabilities reached 826.81 billion yuan. The company's financial expenses (interest expense) over the past three years were approximately 14 billion yuan in 2024, 18 billion to 20 billion yuan in 2025, and approximately 9.45 billion yuan in interest expense in the first half of 2026.
In New Hope's financial statements for the first half of 2026, its interest coverage ratio fell from 2 in the same period last year to -0.36 in the first half of this year. This indicator generally represents the number of times the money earned from a company's operations covers its interest expense. A negative figure means that the money earned from its core business is not enough to cover interest payments.
New Hope is not alone; pig farming companies as a whole are experiencing deep losses. 20 listed pig farming companies recorded combined losses of more than 233 billion yuan in the first half of the year. Among them, Muyuan Foods (002714.SZ) reported a loss of 60.78 billion yuan, while Wens Foodstuff (300498.SZ) reported a loss of 43.66 billion yuan.
As National Day arrived, the live hog market did not see the peak-season demand of previous years, when pig traders competed to buy pigs and bid up prices.
According to data from the Ministry of Agriculture and Rural Affairs, in week 4 of 9 month, the national livehog pricewas 11.36 yuan/kg, down 1% month on month. According to data from the live hog, pork and feed price platform Hangqingbao, on 30 9, the national livehog priceAt 10.21 yuan/kg, down approximately 6% month over month.
“Pork prices are currently at their lowest level in twenty years. Prices below 12 yuan/kg have persisted for a year, and there are currently no signs of improvement.” Xu Qingsong, who has worked in market research for several publicly listed pork companies, told Southern Weekend.
According to Xu Qingsong, the industry's current cost price is approximately 12 yuan/kg. This also means that “losing money on every head sold” has continued for a year. According to research data from the agricultural and livestock consulting firm Boya Hexun, in the first half of 2026, the average breeding cost for leading domestic pig companies was around 12.4 yuan/kg.
2 expanded rapidly
Wind data shows that New Hope's asset-liability ratio has risen sharply from 31.66% ten years ago to 70.7% in the first half of 2026.
13 years ago, 80 later, Liu Chang took over the family business from her father, succeeding Liu Yonghao as chairwoman of New Hope. At the time, the focus of discussion was whether this new leader, labeled a “returnee” and “second-generation rich,” could transform New Hope into a world-class agriculture and livestock company.
New Hope was founded in 1998. At the time of its founding, it was solely a feed company, ranking first in China in annual feed production capacity and first in the world in annual poultry slaughter capacity. At this stage, pig farming was not the company’s core business.
Three years after taking over, Liu Chang released the “Pig Farming Business Strategic Plan” in 2016, beginning to ramp up hog farming and rapidly expand its scale. According to a research report by Minsheng Securities at the end of 2022, from 2016 to 2021, New Hope’s capacity for breeding and fattening pigs rapidly expanded from 200 ten thousand head to 3800 ten thousand head.
In 2018, New Hope set a target of reaching an annual hog output of 2500 million head in 2022, nearly 10 times the company's output of 255 million head that year. Along with its large-scale expansion, New Hope's total debt has also continued to grow. According to the company's previously disclosed announcements on plans to build new pig farms, 20% of the funding would come from its own funds and 80% from bank loans.
In the same year, New Hope's interest-bearing liabilities were 121 billion yuan; by the end of 2021, this figure had reached 679 billion yuan.
From 2021 to 1—11, New Hope’s cumulative new borrowings amounted to 287 billion yuan. This included 212.88 billion yuan in bank loans and 74.28 billion yuan in corporate bonds, company bonds, financial bonds, and non-financial enterprise debt financing instruments, accounting for 55.9% of net assets at the end of the previous year. Almost all of these funds were used for pig farming project construction.
This brought new hope after the first loss-making financial report since its listing in 1998. In 2021, New Hope recorded a loss of 95 billion yuan, almost all of which came from its pig farming business. In 2022, New Hope began reducing its total borrowings.
According to the rating report issued by China Lianhe Credit Rating Co., Ltd. in 2025 7, at year-end 2022–2024, New Hope’s total liabilities and total debt fluctuated and declined. The report notes that New Hope’s debt consists mainly of bank borrowings, its maturity structure is becoming more balanced, but its debt burden is heavy.
At the end of 2024, New Hope's total liabilities were 813.68 billion yuan. Of its total debt, bank loans accounted for 72%, and bonds accounted for 13%. In 2025, New Hope optimized its debt structure.
In 2026, at 3, New Hope Group Chairman Liu Yonghao attended the NationalTwo SessionsAs mentioned, financial instruments—particularly futures hedging—are an important addition to companies’ risk prevention and control measures, and are also an internationally accepted practice. New Hope does not use futures hedging to make a profit; rather, it uses it to ensure stable production and reduce the impact and losses caused by cyclical fluctuations. In 6 month, New Hope passed two financing proposals to register new debt financing instruments.
In mid-9, Liu Yonghao responded in a media interview that the words “financial collapse” would not appear in New Hope’s dictionary. Faced withPig cycleDebt is a normal feature of modern business operations. What matters is that the level of debt has not crossed the industry’s warning threshold, that all debt is used for core business operations rather than speculation, and that the national policy of supporting the real economy has not changed.
3“The Chicken Game”
This timePig cycle, unlike in the past.
In the pastPig cycle, driven by retail investors, the dominant force in the market, chasing gains and selling on declines. In recent years, industry concentration has continued to increase, while the pace of capacity reduction has slowed considerably, further prolonging the bottom of the cycle.
According to the monitoring methodology of the Ministry of Agriculture and Rural Affairs, the proportion of large-scale pig farming nationwide had exceeded 70% in 2024 and continued to increase slightly in 2025. Before 2018, small-scale farmers accounted for more than six tenths. 2026Two SessionsDuring this period, National People's Congress deputy Xie Rupeng expressed the view that for every additional 1% of large-scale production capacity, approximately 3% to 5% of small-scale farmers would exit.
“ In the past, farmers lost their own money. Now that the group operates at scale, the company is reluctant to cut production when it has assets at stake, because the cost of resuming production is higher,” Xu Qingsong said.
On 9 month 30, Fitch Ratings also noted in a research report that livestock companies’ increased financial capacity to withstand losses had delayed capacity rationalization, instead prolonging the industry’s downturn.
The traditional logic of “pig prices fall—small-scale farmers exit—supply contracts—prices rise” has been broken. Leading companies are reducing costs faster than pig prices are falling, and the exit of small-scale farmers is no longer enough to drive a contraction in supply.
“Secondly, policy support and relief have delayed market-based clearing, so we will not see the kind of rapid bottoming out and rapid rebound that occurred in the past.” Jiang Han, senior researcher at Pangoal Institution, told a Southern Weekend reporter. The current period may be the longest-lasting cyclical trough in history.
But for now, leading companies can still “afford to lose money,” because they have access to various financing channels. Several publicly listed pig farming companies, including New Hope, also use hedging to cushion the impact.
Xu Qingsong is still conducting research at a large number of pig farming companies. His impression is that “efficiency is improving, and everyone can still hang on; not many are proactively reducing capacity.” With financial support in place, unless loans are halted and pig farms are dismantled, “why would companies choose to reduce capacity?”
Jiang Han uses the term “chicken game” to describe the current live hog market. Everyone is holding on, and no one is willing to voluntarily exit on a large scale, so losses are naturally spreading across the board. Currently, live hogs nationwidePig pricesSignificantly below the industry cost line, self-breeding and self-rearing operations have been running at a per-head loss for several consecutive months. Companies with weaker cost control face even higher losses per head. The purchased piglet fattening model is incurring heavier losses, leaving almost no room for profit across the industry.
“This round will primarily affect companies with high leverage, heavy debt burdens, and weak cost-control capabilities the most,” Jiang Han said. He believes the bottoming-out process will continue for some time, and there will not be a sharp rebound right away. For the industry to genuinely improve, there will need to be further reductions in the breeding sow population, with widespread losses forcing inefficient capacity to exit in real terms.
A series of regulatory policies to reduce capacity in the hog industry are being introduced one after another. In 2025年5月, the National Development and Reform Commission held talks with leading hog companies, requiring them to suspend new capacity for breeding sows in order to curb capacity expansion at the source. In 6月, the Ministry of Agriculture and Rural Affairs held a hog production dispatch meeting and set a target to reduce the national breeding sow herd by 100万头 to 3950万头, a move that industry insiders considered more forceful than ever before.
In 2026 year 5 month, the Ministry of Agriculture and Rural Affairs issued the “Implementation Plan for Comprehensive Regulation of Pig Production Capacity (2026 Revision),” further reducing the normal national inventory of breeding sows from 3900 ten thousand head to around 3750 ten thousand head.
In 6, the Ministry of Agriculture and Rural Affairs and the National Development and Reform Commission jointly held a symposium, where they for the first time issued four mandatory requirements for large-scale livestock enterprises: take the lead in reducing production capacity and output, take the lead in strictly controlling secondary fattening, take the lead in culling weak piglets, and take the lead in reducing market weights. Several publicly listed pig farming companies said they would adjust production capacity downward in accordance with the requirements.
“Only those who can endure it can stay,” Xu Qingsong said.
The announcement also stated that the maximum margin occupied by hedging business during 2026–2027 would not exceed 33 billion yuan.
Under the Futures and Derivatives Law of the People’s Republic of China, hedging refers to futures and derivatives transactions that traders enter into to manage risks arising from changes in the value of their assets, liabilities and the like, and that substantially correspond to those assets, liabilities and the like.futures transactionsand derivatives transactions.
“Companies that hedge are mainly those with raw material procurement needs. Considering the price difference between spot and futures, they lock in a forward purchase contract,” a securities industry professional told Southern Weekly. The purpose for companies is not to make money from arbitrage, but to smooth out risk.
Previous announcements show that this is not the first time New Hope has engaged in hedging; other A-share listed pig farming companies were also involved in this business during the same period. According to incomplete statistics, New Hope has conducted hedging five times since 2013, but has not disclosed the amounts. The margin ranged from 1 billion to 8 billion yuan, a relatively small scale.
This time, the margin used will not exceed 33 billion yuan, and the limit has already been raised by 4 times.
On the eve of National Day six years ago, New Hope's share price once broke through its historical high of 42.18 yuan per share. It now stands at only 6.9 yuan per share, and its market capitalization has fallen by 1400 billion yuan. The company recorded a loss of 17 billion yuan in the first half of 2026, approaching its full-year loss in 2025.
1 “Losing money on every pig sold”
As for its financial position, as of the first half of 2026, New Hope had a book balance of 79.63 billion yuan in monetary funds, while net cash flow from operating activities was 16.46 billion yuan, down 68.05% year on year. In addition, the company's total liabilities reached 826.81 billion yuan. The company's financial expenses (interest expense) over the past three years were approximately 14 billion yuan in 2024, 18 billion to 20 billion yuan in 2025, and approximately 9.45 billion yuan in interest expense in the first half of 2026.
In New Hope's financial statements for the first half of 2026, its interest coverage ratio fell from 2 in the same period last year to -0.36 in the first half of this year. This indicator generally represents the number of times the money earned from a company's operations covers its interest expense. A negative figure means that the money earned from its core business is not enough to cover interest payments.
New Hope is not alone; pig farming companies as a whole are experiencing deep losses. 20 listed pig farming companies recorded combined losses of more than 233 billion yuan in the first half of the year. Among them, Muyuan Foods (002714.SZ) reported a loss of 60.78 billion yuan, while Wens Foodstuff (300498.SZ) reported a loss of 43.66 billion yuan.
As National Day arrived, the live hog market did not see the peak-season demand of previous years, when pig traders competed to buy pigs and bid up prices.
According to data from the Ministry of Agriculture and Rural Affairs, in week 4 of 9 month, the national livehog pricewas 11.36 yuan/kg, down 1% month on month. According to data from the live hog, pork and feed price platform Hangqingbao, on 30 9, the national livehog priceAt 10.21 yuan/kg, down approximately 6% month over month.
“Pork prices are currently at their lowest level in twenty years. Prices below 12 yuan/kg have persisted for a year, and there are currently no signs of improvement.” Xu Qingsong, who has worked in market research for several publicly listed pork companies, told Southern Weekend.
According to Xu Qingsong, the industry's current cost price is approximately 12 yuan/kg. This also means that “losing money on every head sold” has continued for a year. According to research data from the agricultural and livestock consulting firm Boya Hexun, in the first half of 2026, the average breeding cost for leading domestic pig companies was around 12.4 yuan/kg.
2 expanded rapidly
Wind data shows that New Hope's asset-liability ratio has risen sharply from 31.66% ten years ago to 70.7% in the first half of 2026.
13 years ago, 80 later, Liu Chang took over the family business from her father, succeeding Liu Yonghao as chairwoman of New Hope. At the time, the focus of discussion was whether this new leader, labeled a “returnee” and “second-generation rich,” could transform New Hope into a world-class agriculture and livestock company.
New Hope was founded in 1998. At the time of its founding, it was solely a feed company, ranking first in China in annual feed production capacity and first in the world in annual poultry slaughter capacity. At this stage, pig farming was not the company’s core business.
Three years after taking over, Liu Chang released the “Pig Farming Business Strategic Plan” in 2016, beginning to ramp up hog farming and rapidly expand its scale. According to a research report by Minsheng Securities at the end of 2022, from 2016 to 2021, New Hope’s capacity for breeding and fattening pigs rapidly expanded from 200 ten thousand head to 3800 ten thousand head.
In 2018, New Hope set a target of reaching an annual hog output of 2500 million head in 2022, nearly 10 times the company's output of 255 million head that year. Along with its large-scale expansion, New Hope's total debt has also continued to grow. According to the company's previously disclosed announcements on plans to build new pig farms, 20% of the funding would come from its own funds and 80% from bank loans.
In the same year, New Hope's interest-bearing liabilities were 121 billion yuan; by the end of 2021, this figure had reached 679 billion yuan.
From 2021 to 1—11, New Hope’s cumulative new borrowings amounted to 287 billion yuan. This included 212.88 billion yuan in bank loans and 74.28 billion yuan in corporate bonds, company bonds, financial bonds, and non-financial enterprise debt financing instruments, accounting for 55.9% of net assets at the end of the previous year. Almost all of these funds were used for pig farming project construction.
This brought new hope after the first loss-making financial report since its listing in 1998. In 2021, New Hope recorded a loss of 95 billion yuan, almost all of which came from its pig farming business. In 2022, New Hope began reducing its total borrowings.
According to the rating report issued by China Lianhe Credit Rating Co., Ltd. in 2025 7, at year-end 2022–2024, New Hope’s total liabilities and total debt fluctuated and declined. The report notes that New Hope’s debt consists mainly of bank borrowings, its maturity structure is becoming more balanced, but its debt burden is heavy.
At the end of 2024, New Hope's total liabilities were 813.68 billion yuan. Of its total debt, bank loans accounted for 72%, and bonds accounted for 13%. In 2025, New Hope optimized its debt structure.
In 2026, at 3, New Hope Group Chairman Liu Yonghao attended the NationalTwo SessionsAs mentioned, financial instruments—particularly futures hedging—are an important addition to companies’ risk prevention and control measures, and are also an internationally accepted practice. New Hope does not use futures hedging to make a profit; rather, it uses it to ensure stable production and reduce the impact and losses caused by cyclical fluctuations. In 6 month, New Hope passed two financing proposals to register new debt financing instruments.
In mid-9, Liu Yonghao responded in a media interview that the words “financial collapse” would not appear in New Hope’s dictionary. Faced withPig cycleDebt is a normal feature of modern business operations. What matters is that the level of debt has not crossed the industry’s warning threshold, that all debt is used for core business operations rather than speculation, and that the national policy of supporting the real economy has not changed.
3“The Chicken Game”
This timePig cycle, unlike in the past.
In the pastPig cycle, driven by retail investors, the dominant force in the market, chasing gains and selling on declines. In recent years, industry concentration has continued to increase, while the pace of capacity reduction has slowed considerably, further prolonging the bottom of the cycle.
According to the monitoring methodology of the Ministry of Agriculture and Rural Affairs, the proportion of large-scale pig farming nationwide had exceeded 70% in 2024 and continued to increase slightly in 2025. Before 2018, small-scale farmers accounted for more than six tenths. 2026Two SessionsDuring this period, National People's Congress deputy Xie Rupeng expressed the view that for every additional 1% of large-scale production capacity, approximately 3% to 5% of small-scale farmers would exit.
“ In the past, farmers lost their own money. Now that the group operates at scale, the company is reluctant to cut production when it has assets at stake, because the cost of resuming production is higher,” Xu Qingsong said.
On 9 month 30, Fitch Ratings also noted in a research report that livestock companies’ increased financial capacity to withstand losses had delayed capacity rationalization, instead prolonging the industry’s downturn.
The traditional logic of “pig prices fall—small-scale farmers exit—supply contracts—prices rise” has been broken. Leading companies are reducing costs faster than pig prices are falling, and the exit of small-scale farmers is no longer enough to drive a contraction in supply.
“Secondly, policy support and relief have delayed market-based clearing, so we will not see the kind of rapid bottoming out and rapid rebound that occurred in the past.” Jiang Han, senior researcher at Pangoal Institution, told a Southern Weekend reporter. The current period may be the longest-lasting cyclical trough in history.
But for now, leading companies can still “afford to lose money,” because they have access to various financing channels. Several publicly listed pig farming companies, including New Hope, also use hedging to cushion the impact.
Xu Qingsong is still conducting research at a large number of pig farming companies. His impression is that “efficiency is improving, and everyone can still hang on; not many are proactively reducing capacity.” With financial support in place, unless loans are halted and pig farms are dismantled, “why would companies choose to reduce capacity?”
Jiang Han uses the term “chicken game” to describe the current live hog market. Everyone is holding on, and no one is willing to voluntarily exit on a large scale, so losses are naturally spreading across the board. Currently, live hogs nationwidePig pricesSignificantly below the industry cost line, self-breeding and self-rearing operations have been running at a per-head loss for several consecutive months. Companies with weaker cost control face even higher losses per head. The purchased piglet fattening model is incurring heavier losses, leaving almost no room for profit across the industry.
“This round will primarily affect companies with high leverage, heavy debt burdens, and weak cost-control capabilities the most,” Jiang Han said. He believes the bottoming-out process will continue for some time, and there will not be a sharp rebound right away. For the industry to genuinely improve, there will need to be further reductions in the breeding sow population, with widespread losses forcing inefficient capacity to exit in real terms.
A series of regulatory policies to reduce capacity in the hog industry are being introduced one after another. In 2025年5月, the National Development and Reform Commission held talks with leading hog companies, requiring them to suspend new capacity for breeding sows in order to curb capacity expansion at the source. In 6月, the Ministry of Agriculture and Rural Affairs held a hog production dispatch meeting and set a target to reduce the national breeding sow herd by 100万头 to 3950万头, a move that industry insiders considered more forceful than ever before.
In 2026 year 5 month, the Ministry of Agriculture and Rural Affairs issued the “Implementation Plan for Comprehensive Regulation of Pig Production Capacity (2026 Revision),” further reducing the normal national inventory of breeding sows from 3900 ten thousand head to around 3750 ten thousand head.
In 6, the Ministry of Agriculture and Rural Affairs and the National Development and Reform Commission jointly held a symposium, where they for the first time issued four mandatory requirements for large-scale livestock enterprises: take the lead in reducing production capacity and output, take the lead in strictly controlling secondary fattening, take the lead in culling weak piglets, and take the lead in reducing market weights. Several publicly listed pig farming companies said they would adjust production capacity downward in accordance with the requirements.
“Only those who can endure it can stay,” Xu Qingsong said.