Easing Money Securities has published a research report stating that pig farming is currently experiencing deep losses. Since June, the price of piglets has declined again, leading to losses for both piglets and fattened pigs, which may accelerate the reduction of breeding sow inventory. The industry is currently on the left side of the cycle bottom, and farming entities with robust cash flow and excellent cost control are poised to benefit.
The report notes that grandparent stock imports in 2025 fell by 6.85% year-on-year, and imports were halted from January to May 2026. This supports strong breeder chicken market conditions in the second half of 2026, with upstream breeding companies set to benefit first from the industry supply gap.
For beef cattle, although short-term farming profits have seen a slight recovery, the long breeding cycle means calf supply is unlikely to recover quickly in the near term. The brokerage judges that the industry will maintain a prolonged upward cycle from 2026 to 2028. The main views of Easing Money Securities are as follows:
Pig Farming Sector
The first half of 2026 is expected to see an oversupply of pigs, with the industry continuing to experience deep losses. This presents a window for strategic positioning on the left side of the market cycle. The average pig price in Q1 and Q2 2026 fell significantly year-on-year, with prices bottoming in April. Self-breeding and self-farming operations have been unprofitable for 41 consecutive weeks from the third week of September 2025 to the third week of July 2026, while operations purchasing piglets for fattening are also deeply in the red, putting continuous pressure on farming companies' cash flow.
Breeding sow inventory peaked in Q2 2025, leading to persistently high slaughter volumes in early 2026. The new version of the capacity regulation policy has lowered the reasonable inventory level for sows to 37.5 million head, forcing the accelerated exit of inefficient capacity. This, combined with the renewed decline in piglet prices in June and losses across both segments, is strengthening the ongoing capacity reduction.
According to Ministry of Agriculture data, the number of newborn piglets in March this year saw its first year-on-year decline in 17 months. In April, the number of newborn piglets shifted from a sequential decline to an increase. It takes approximately six months to raise newborn piglets to slaughter weight, meaning slaughter pressure in Q3 this year will remain high. The brokerage judges that pig prices will continue to fluctuate at low levels in Q3, with capacity reduction persisting.
Q4 is typically the traditional peak consumption season. However, considering efficiency improvements and the fact that breeding sow inventory in Q1 2026 is still above the normal level, the brokerage believes pig prices in the second half of 2026 lack a foundation for a significant rise. The supply-demand balance is expected to gradually improve in 2027.
White-Feathered Broiler Chickens
The anticipated restriction on overseas grandparent stock imports has materialized, and strong breeder chicken market conditions are expected to persist in the second half of the year. Affected by avian influenza, grandparent stock imports in 2025 fell by 6.85% year-on-year. Imports were halted from January to May 2026, resuming in June. It takes seven months for newly imported grandparent stock to translate into parent stock supply, meaning new imports within the year are unlikely to alleviate the tight supply of breeding stock in 2026.
Supply contraction has driven breeder chicken prices continuously higher, with parent stock chick prices exceeding 50 yuan per set in Q2. Strong price conditions are expected to continue in the second half of 2026.
Beef Cattle Sector
From November 2022 to February 2025, live cattle and beef prices experienced a sustained and deep downturn, with a cumulative maximum decline exceeding 30%. This was primarily due to previous capacity expansion, increased beef imports, and substitution by low-priced pork suppressing demand.
Since March 2025, market conditions have reversed upward. The core driver is two consecutive years of industry losses leading to a reduction in cattle inventory for two years, resulting in a contraction in base supply. Previous deep losses led to a low level of breeding cows. The US Department of Agriculture forecasts China's domestic beef production in 2026 to decline by 5.12% year-on-year. Concurrently, imported beef is subject to a three-year quota management system, with a 55% tariff imposed outside the quota, restricting the supply of low-priced imports and supporting domestic meat prices.
Although short-term farming profits have seen a slight recovery, the long breeding cycle means calf supply is difficult to restore in the short term. The brokerage judges that the industry will maintain a prolonged upward cycle from 2026 to 2028.
Risk Factors to Consider
Potential risks include policy and environmental regulation changes, large-scale outbreaks of livestock and poultry diseases, and fluctuations in feed raw material prices.
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