In a move to stabilize the pork market and enhance the role of central reserves, China's Ministry of Commerce, National Development and Reform Commission, and Ministry of Finance have initiated a purchase of frozen pork for state reserves. The authorities will continue to monitor market conditions closely, analyze trends, and coordinate reserve adjustments with relevant departments to ensure stable market operations.
The second batch of central frozen pork reserve purchases for 2026 is scheduled to commence on April 3. According to a notice from Hua Chu Wang, the planned purchase involves 10,000 tons of domestically produced Type II and Type IV frozen lean pork, with承储 enterprises and storage prices to be determined through competitive bidding.
Boosted by the reserve purchase news, A-share hog farming stocks rallied against the broader market trend. By the market close, Juxing Agriculture & Animal Husbandry surged by the 10.01% daily limit, while Shennong Group advanced 4.88%. Huatong Group, MUYUAN, and Wens Foodstuff Group rose 3.96%, 3.44%, and 2.31%, respectively.
Notably, live hog spot prices have remained persistently low. Data from Yongyi Consulting shows that as of April 2, the national average live hog price was 9.23 yuan per kilogram, a decline of over 20% compared to the pre-Spring Festival price of 11.66 yuan per kilogram on February 13.
The rapid decline in hog prices after the Spring Festival is primarily attributed to a continuous increase in the number of hogs being sent to market, leading to significant supply pressure and driving prices down. Current spot prices for live hogs are at their lowest level in the past decade.
In addition to the persistently low spot prices, the hog-to-corn ratio has also triggered a warning threshold, serving as a key basis for initiating the reserve purchases. Data from the National Development and Reform Commission indicates that the hog-to-corn ratio in large and medium-sized cities has remained below 5:1 for five consecutive weeks since February 25. According to regulatory guidelines, a ratio below 5:1 signifies a Level 1 warning for excessive price decline, prompting the initiation of central and local temporary reserve purchases.
Regarding the market impact of this frozen pork purchase, it is viewed that while the purchase volume represents a small proportion of China's total pork supply, the government's action signals an intention to stabilize prices. This aims to prevent farmers from excessive selling or culling of sows, thereby stabilizing confidence within the breeding sector. In the long term, such measures can help prevent sharp fluctuations in hog prices.
Against the backdrop of continuously declining hog prices in recent years, the domestic hog farming landscape has undergone significant transformation. High breeding costs are accelerating the exit of small and medium-sized farmers from the market. Industry resources are increasingly concentrating towards leading enterprises, which are expanding their competitive advantages. The overall industry is characterized by increased volume but decreased profits, alongside intensifying divergence.
The low hog prices throughout 2025 highlighted operational pressures on breeding enterprises. Recent annual reports from listed hog companies show that leading players maintained profitability due to cost advantages, although net profits declined year-on-year. Specifically, in 2025, MUYUAN reported revenue of 144.145 billion yuan, a year-on-year increase of 4.49%, but its net profit attributable to shareholders was 15.487 billion yuan, down 13.39% year-on-year. Sichuan Dekon Group reported revenue of 23.159 billion yuan, up 3.09% year-on-year, but its net profit was 1.422 billion yuan, a significant decrease of 56.51% year-on-year.
Faced with ongoing market pressures, cost reduction and efficiency improvement have become the core focus for listed hog companies. Since the beginning of the year, breeding costs for these companies have continued to decline. MUYUAN's average breeding cost for the first two months of 2026 was approximately 12 yuan per kilogram, with excellent production lines achieving costs as low as 11 yuan per kilogram. Dekon Group's complete breeding cost fell to around 11.9 yuan per kilogram in January 2026, while Wens Foodstuff Group's breeding cost remained stable at around 12 yuan per kilogram in February 2026.
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