On the evening of July 10th, Muyuan Foods Group Co.,Ltd. (SHE: 002714), a leading hog farming enterprise, disclosed its preliminary results for the first half of 2026. The company expects its net profit attributable to shareholders to record a loss ranging from 5.7 billion to 6.7 billion yuan.
Concurrently, sales data for June indicates that the average selling price for commercial hogs among major A-share listed pig farming companies has fallen below the 10 yuan per kilogram threshold, with most firms also reporting a month-on-month contraction in slaughter volume. In response to the persistently low hog prices, Muyuan is shifting its focus towards reducing debt, lowering costs, and improving profitability in its slaughtering segment.
Industry experts suggest that with positive demand-side factors expected to materialize by the end of the third quarter, hog prices may recover to above 10 yuan per kilogram by September. However, the pace of meaningful capacity reduction and the strength of consumer demand recovery remain the critical variables that will determine if the industry can exit its current downturn.
The preliminary announcement from Muyuan, released on July 10th, attributes the anticipated substantial first-half loss to persistently low hog market prices and intense pressure from the industry's deep downturn.
A company representative stated that amidst the severe losses across the sector, Muyuan has avoided reckless expansion. Instead, its priority has been repairing its balance sheet and managing risks. By the end of the first quarter of 2026, the company's asset-liability ratio was successfully reduced to 50.73%, marking a significant decrease of 3.42 percentage points from the start of the year. Total liabilities have also been reduced by over 3.1 billion yuan compared to the year's beginning, reaching the lowest level since the interim report of 2021.
Regarding liquidity management, the company's cash and cash equivalents balance stood at 14.27 billion yuan at the end of Q1 2026. The company's Chief Strategy Officer and Board Secretary expressed confidence in navigating the industry's trough in 2026, citing the existing cash reserves, credit lines, and bond financing capabilities.
On the cost front, Muyuan's fully allocated cost for hog farming had steadily decreased to 11.6 yuan per kilogram by May 2026. The company's President noted that against the previously stated target of reducing costs by 600 yuan per head, 323 yuan had been achieved by the end of May, leaving a further 277 yuan in potential savings to be realized.
The company's slaughtering and meat processing business, a key component of its integrated industrial chain, is evolving into a stable new profit driver. After achieving its first annual profit in 2025, the segment maintained a positive profit trend in the first half of 2026, recording profitability in both the first and second quarters. The CEO of the meat division indicated that in 2025, the proportion of self-slaughtered hogs was 36.75%, suggesting significant room for future growth and optimization of the sales channel structure.
Monthly data disclosed by various companies shows a broad decline in hog sales prices for June, with the vast majority of firms reporting average selling prices below 10 yuan per kilogram. In tandem, most pig farming enterprises either actively or passively slowed their pace of slaughtering in June.
Third-party commodity analysts have provided their outlook for the second half of 2026 in light of the weak market conditions.
Their analysis suggests that the market will be in a phase of contention during July. Influenced by farmers' reluctance to sell and weaker seasonal consumption demand, hog prices are likely to exhibit a volatile pattern of rising initially before falling again. However, the monthly average price is expected to see a slight sequential rebound following the earlier steep decline.
In August, the market is anticipated to maintain a state of weak supply and weak demand. Price movements may initially show a narrow range of fluctuation before a slight uptick towards the month's end. The average price for the entire month is forecast to hover around 10.01 yuan per kilogram.
A potential turning point may emerge in September. As temperatures cool across the country and combined with stockpiling demand for the Mid-Autumn Festival and National Day holidays, positive demand-side factors are expected to accelerate. Hog prices are projected to fluctuate and recover to around 10.47 yuan per kilogram.
Nevertheless, analysts point out that the key determinants for whether the hog farming industry can fully exit the cyclical bottom will be the actual strength of end-consumer demand recovery and substantive progress in reducing production capacity.
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