After a brief rebound, China's domestic pig market has weakened again, with both spot and futures prices coming under pressure. Data shows that as of August 4, the average price of domestic three-way crossbred pigs for slaughter stood at 10.33 yuan per kilogram, down over 9% from the July 7 peak. The average wholesale pork price at national agricultural product markets has fallen to 15.77 yuan per kilogram. Recently, the price of the main pig futures contract for September 2026 also dipped to 10,635 yuan per ton, hitting a record low since its listing.
Industry insiders believe that concentrated slaughtering by farms, combined with hot weather pushing pork consumption into a traditional off-season, has created a temporary supply-demand mismatch, which is the main reason for the recent price decline. Meanwhile, by the end of the second quarter, the national breeding sow herd had dropped to 37.8 million head, close to the normal target of 37.5 million head, indicating a significant acceleration in industry capacity reduction. However, with continuous improvements in breeding efficiency, the effectiveness of this capacity reduction remains to be seen. The short-term pattern of strong supply and weak demand has not fundamentally changed, and a stable recovery in pig prices still requires further confirmation of improved terminal demand and capacity reduction signals.
Pig Prices Return to a Weak Trend
Recently, pig prices have re-entered a downward channel. According to the latest ten-day data from the National Bureau of Statistics, as of July 31, the price of pigs (foreign three-way crossbred) was 10.4 yuan per kilogram, down 0.6 yuan per kilogram from July 20. Daily data from Zhuochuang Information shows that as of August 4, the average price of domestic three-way crossbred pigs for slaughter was 10.33 yuan per kilogram, a 9.15% decrease from the July 7 peak of 11.37 yuan per kilogram. The weakening of pig prices has also driven down terminal pork prices. Data from the Ministry of Agriculture and Rural Affairs shows that as of August 4, the average wholesale pork price at national agricultural product markets was 15.77 yuan per kilogram, down 0.27 yuan per kilogram from July 20.
Regarding the reasons for the recent weakness in pig spot prices, Li Li, an analyst at Zhengxin Futures, stated that the main cause is a concentrated release of supply coinciding with a seasonal demand trough, creating a temporary supply-demand mismatch. On the supply side, farmers are generally accelerating the pace of slaughter to avoid the risk of heat stress in fattening pigs during the hottest days of summer and to alleviate financial pressure from prolonged losses. At the same time, large-scale breeding enterprises are sprinting to meet their monthly slaughter targets, leading to a concentrated release of short-term market supply, which places strong downward pressure on pig prices. In contrast, the demand side is struggling to absorb the supply. Li Li noted that the current period is a traditional off-season for pork consumption, with persistent high temperatures reducing residents' appetite for fresh meat. Additionally, summer school holidays and temporary work stoppages at some construction sites have led to a simultaneous decline in group meal procurement demand. Slaughterhouses have fewer orders and are reluctant to purchase, making it difficult for them to absorb pigs at higher prices, further dragging down the spot market.
The decline in the futures market has been even more pronounced. Data shows that on August 3, the main pig futures contract for September 2026 hit a low of 10,635 yuan per ton during trading, a record low since its listing, representing a cumulative decline of 16.26% from its high on July 6. Jiang Zhenfei, an agricultural products analyst at Zijing Tiantian Futures, believes that the current pig market is generally well-supplied, with spot prices fluctuating weakly and pessimistic market sentiment spreading. Against this backdrop, the main pig futures contract for September 2026 is entering a phase of digesting its premium, with the decline in the futures market being significantly larger than that in the spot market. Based on the growth cycle from piglet restocking to fattening and slaughter, Jiang Zhenfei estimates that pig market supply will remain ample in August. Without measures like concentrated pig retention or secondary fattening to alleviate temporary supply pressure, a recovery in spot prices will depend on improved terminal demand, with the market potentially seeing a marginal improvement around mid-to-late August.
Industry Capacity Reduction Accelerates
While short-term supply pressure is still being released, from a medium to long-term perspective, capacity adjustments in the pig industry are accelerating. On July 24, Chen Bangxun, Director of the Planning and Development Department of the Ministry of Agriculture and Rural Affairs, stated at a press conference held by the State Council Information Office that by the end of the second quarter, the national breeding sow herd had been reduced to 37.8 million head, a decrease of 2.63 million head year-on-year and a reduction of 1.81 million head from the end of 2025. The "Implementation Plan for Comprehensive Adjustment and Control of Pig Production Capacity (2026 Revision)" previously issued by the Ministry of Agriculture and Rural Affairs proposed that for the early stage of the "15th Five-Year Plan," the normal breeding sow herd size should be set at around 37.5 million head, based on meeting the normal pork consumption needs of the country.
Jiang Zhenfei stated that the breeding sow herd at the end of the second quarter is close to the predetermined target of 37.5 million head, suggesting that the current round of capacity reduction is nearing completion. However, Chen Bangxun also noted that the overall supply in the pig market remains ample, and the basic pattern of strong supply and weak demand has not fundamentally changed. The Ministry of Agriculture and Rural Affairs will continue to promote comprehensive adjustment and control of pig production capacity, increase the frequency of early warning information, and guide supply and demand to become more aligned. Furthermore, uncertainty remains as to whether the decline in capacity numbers will translate into a genuine contraction in commercial pig supply. Jiang Zhenfei warned that as breeding efficiency continues to improve and the reserve of replacement gilts remains relatively ample, a decline in the breeding sow herd offset by increased production efficiency means that piglet supply and commercial pig slaughter capacity may not see a substantial contraction, making it difficult for the capacity reduction expectations to materialize. In this scenario, prices for distant pig futures contracts could continue to fall, gradually converging with spot prices.
Price Recovery Still Awaits Signals
Looking ahead, industry insiders believe that while capacity reduction in the pig industry provides some support for the long-term market, short-term supply pressure has not been fully absorbed, and the futures market faces significant resistance to a rebound. Jiang Zhenfei stated that in the short term, the significant decline in the breeding sow herd has not immediately brought medium to long-term bullish factors to the pig futures market. Instead, the market has begun to anticipate a potential slowdown in the pace of future capacity reduction, dragging pig futures prices lower. Supported by expectations of gradual capacity reduction in the distant future, contract prices for 2027 futures have remained generally above the industry's breeding cost line. Some large-scale farms and small-scale farmers have taken this opportunity to purchase piglets and replacement gilts to plan for medium to long-term production, while using futures tools to lock in breeding profits. "Overall, it is expected that without major disease disruptions, the medium to long-term pig industry capacity will not face a significant gap, and the potential for price recovery is likely limited," Jiang Zhenfei said.
Li Li also believes that while pig prices have entered a bottom range, the industry's pattern of strong supply and weak demand has not fundamentally changed. Therefore, the industry should remain cautious when predicting a price bottom reversal. Only when the benefits of capacity reduction gradually materialize, accompanied by the resonance of key signals such as leading piglet price indices, term structure, and price spreads between standard and fattened pigs, will the market have a basis for systematically revising its original judgment. From the perspective of the pig cycle, Zhang Xiufeng, a pig analyst at Xinda Futures, believes that the current market is in the declining phase of the sixth pig cycle since 2006. Following the outbreak of African swine fever, the market share of large-scale breeding enterprises has rapidly increased, altering the traditional "four-year cycle" pattern. The time span of a single pig cycle has shortened from about four years to about two years, with the seventh pig cycle potentially starting in the second half of 2026 or 2027.
Regarding the futures market, Jiang Zhenfei stated that pig futures have recently followed spot prices lower, with both main and distant contracts still carrying a high premium that needs to be further digested. The resistance to a rebound in the futures market is significant. Investors should wait for clear signs of recovery in the spot market before considering entry.
Comments