In the first three quarters of 2026, China's hog market continued to battle it out at the bottom of the cycle, with live hog futures prices weak and range-bound, and breeding enterprises under pressure.
The operating characteristics and drivers of this hog cycle have shown clear differences from the same periods in history.
Currently, the market is broadly focused on whether the seasonal rally in the fourth quarter can materialize, and on the future direction of capacity control policy.
Pig Prices Under Pressure, Market Structure Shifts
Looking back at the first three quarters, live hog prices traced a curve of "cliff-like decline, weak rebound, bottom grinding."
According to Wei Xiu, an agricultural products analyst at Huishang Futures, at the start of the year, boosted by both the realization of peak-season consumption and breeding units' control of the pace of market releases, hog prices briefly rebounded to a yearly high of 13.30 yuan/kg, before falling all the way; on April 14 they dropped to 8.67 yuan/kg, a near 8-year low.
After prices fell to a low in the second quarter, the third quarter saw some recovery, but the rebound was only fleeting.
"Since the start of this year, the industry has still been in the adjustment phase at the bottom of the cycle, with relatively loose supply and generally greater operating pressure on enterprises," acknowledged Yao Hailong, president of Sichuan Dekon Livestock Food Group.
Reporters learned from interviews that the most notable change in the hog industry this year compared with previous years lies in the institutional upgrading of policy control.
In May this year, the Ministry of Agriculture and Rural Affairs lowered the normal sow herd retention target from 39 million to 37.5 million and tightened the three-color warning range, with some enterprises required to complete reductions before the end of September this year.
Wei Xiu said this shows policy is shifting from "passive response" to "active reduction."
In September this year, the Ministry of Agriculture and Rural Affairs issued the "15th Five-Year Plan for the Development of the National Animal Husbandry and Veterinary Industry," setting up for the first time a special section on normalized and precise regulation of hog production capacity, systematically incorporating previously scattered control measures into a five-year-cycle institutional framework.
"This marks a fundamental shift in the governance logic of China's hog industry: from short-term emergency intervention in response to price fluctuations to a long-term governance mechanism oriented toward cross-cycle operation, thereby driving the hog production capacity structure to evolve continuously toward dynamic supply-demand equilibrium and high-quality development," said Li Li, a senior analyst at Zhengxin Futures.
From a fundamental perspective, Wang Jun, an agricultural products analyst at Minmetals Futures, believes there are four notable characteristics of this year's hog market: first, large volumes of supply, slaughter, and frozen product inventory; second, a further decline in the share of backyard supply, with the price gap between large hogs and standard hogs remaining persistently wide; third, weak consumption that cannot absorb the increase in supply; fourth, the seasonal reduction in supply in summer and other periods is not obvious, leading to a weaker mid-year price rebound.
"Particular attention should be paid to the 'irreversible' structural weakening on the consumption side. With the emergence of macro trends such as aging and declining birth rates, residents' pork consumption has fallen for three consecutive years, and combined with a declining total population, total pork consumption is entering a downward channel," Wei Xiu said.
In addition, from the production side, the industry has also seen some new changes.
Yao Hailong said that on one hand, production efficiency has improved markedly. The national average number of weaned piglets provided per sow per year (PSY) has risen from 17.38 in 2017 to 23 at present, with large-scale farms and leading enterprises reaching PSY of 25-30.
This means the yardstick for measuring the industry's supply capacity is changing: in the past it mainly depended on sow numbers, but now it depends on comprehensive capacity of "quantity x efficiency x slaughter weight."
On the other hand, the degree of scaling and standardization continues to rise. The specialized division of labor between leading enterprises and family farms has become clearer, small and medium-sized backyard farms are accelerating their exit or shifting to the "company plus farmer" cooperation model, and the industrial organization model is being reshaped.
"The reason is that the use of new Danish-line sows has continued to raise per-unit output in the industry, affecting the realization of capacity reduction. In addition, after backyard farms exited, the number of large-hog fattening operators declined, leading to a relatively high premium for fat hogs this year, which stimulated continued holding back of hogs upstream, and inventory rhythm has had an obvious impact on short-term hog price fluctuations," said Li Yihua, an agricultural products analyst at CITIC Futures Research Institute.
In Wei Xiu's view, unlike simple overcapacity in the past, the breakdown in hog prices in 2026 has been compounded by both "inertial capacity expansion plus consumption structure transformation."
"Whether looking at the cumulative hog slaughter volume provided by official data or the slaughter volume of designated slaughtering enterprises, supply is at an absolute high in recent years. From the slaughter perspective, cumulative slaughter volume through July was 263.35 million head, up 22.37% year-on-year. In terms of average slaughter weight, as of the week of September 25, the average live hog slaughter weight was 128.82 kg per head, up 0.27 kg per head from the same period last year, or 0.21% year-on-year," she said.
Affected by the long-term slump in hog prices, operating pressure on breeding enterprises has increased.
"The 2026 semi-annual reports show that the losses of some listed pig enterprises have already exceeded the cumulative losses of the bottom cycle at the end of 2023, and some enterprises have even broken the loss records of the 2021 bottom cycle. Against the backdrop of overall industry losses and significantly intensifying cash flow pressure, the funding strain and financial risks faced by relevant listed pig enterprises are clearly higher than the general level at previous cyclical bottoms," Li Li said.
Seasonal Rally in the Fourth Quarter May Be Expected
The market is broadly watching whether the seasonal rally in the traditional pork consumption peak season in the fourth quarter can materialize.
"Looking ahead to the fourth quarter, factors such as falling temperatures, year-end cured meat production, and Spring Festival stocking will bring a seasonal rally in the peak demand season, but hog slaughter volume remains high, and this year's frozen pork inventory is relatively large, which may cap the upside of hog prices in the peak season," Li Yihua said.
Wang Jun also said the fourth-quarter peak-season rally should be viewed cautiously. Although hog consumption from the fourth quarter of this year to the first quarter of next year will grow significantly, supply will also increase simultaneously. Considering the overall consumption situation this year, hog prices may remain in a low-level range-bound state.
When Will the Hog Cycle Turning Point Arrive?
Li Yihua said that sow capacity reduction has now been underway for more than a year, but higher per-unit output has delayed the cycle turning point. At present, relevant data samples show that piglet births fell month-on-month in August. If piglet births can continue to decline, future pressure from commercial hog slaughter will ease, and signals of a cycle turning point may gradually become clearer.
"From officially published data, the breeding sow herd at the end of the second quarter was 37.8 million head, approaching the green standard of 37.5 million, and the number of culled sows is expected to meet the target by the end of September. Based on this, supply pressure is expected to ease in the second half of next year," Wei Xiu believes.
From the policy side, Li Yihua said overcapacity in the hog industry has always been a policy focus. At present, sow per-unit output is still rising continuously. Controlling sow numbers, avoiding blind expansion, and preventing excessive inventory buildup and stampede-style slaughter remain key concerns for the industry.
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