The first half of 2026 has seen the hog farming industry plunged into significant losses, primarily driven by persistently low hog prices. As major listed pork producers begin releasing their H1 2026 performance forecasts, the overall sector is revealed to be in a state of deep financial distress. This sustained period of unprofitability has dampened demand from downstream farmers for restocking with piglets, leading to losses in the typically profitable piglet sales season. While some recovery to profitability for farrow-to-finish operations is anticipated in the latter half of the year, the sector is expected to remain in the red for the full year of 2026.
Deep Financial Strain in Hog Farming
Hog prices remained under pressure throughout the first six months of 2026. Monitoring data indicates the national average price for hogs was 10.40 yuan per kilogram, representing a year-on-year decline of 29.92%. The price peaked at 13.26 yuan/kg on January 19th and hit a low of 8.59 yuan/kg on April 13th. An oversupply of hogs persisted, especially after the Spring Festival holiday, keeping market volumes high. Prices bottomed in mid-April and stayed at relatively depressed levels through May and June.
The lower year-on-year prices directly translated into reduced farming profits, with the sector experiencing prolonged losses. Calculations based on monitored farming costs show that the profit for a farrow-to-finish operation, which had risen from a loss of 52.13 yuan per head on January 4th to a profit of 65.06 yuan per head by January 19th, plunged to a loss of 418.88 yuan per head by April 14th. Hog prices are the decisive factor for profitability in the short to medium term. The industry entered a loss-making phase in mid-September 2025, and by mid-July 2026, the loss-making cycle for farrow-to-finish operations had extended to ten months. The average loss for such operations in H1 2026 was 221.33 yuan per head, a 202.79% year-on-year decline. The significant drop in hog prices led to a sharp fall in year-on-year profits for 2025.
Taking a leading company as an example, while MUYUAN reported a net profit attributable to shareholders of 15.487 billion yuan in 2025, its preliminary results for the first half of 2026, released on July 10th, paint a different picture. The company anticipates a net loss in the range of 5.7 to 6.7 billion yuan for H1 2026, citing the persistently low hog market prices and the industry's deep downturn.
Modest Feed Cost Relief
Feed constitutes approximately 60% of total hog farming costs, making its price a primary driver of overall production expenses and profitability. An analysis of major feed ingredient prices (soybean meal, corn, bran, amino acids) shows that the cost of hog feed saw a slight decrease in 2026, averaging 2,532.43 yuan per ton, down 0.53% from the same period last year. However, with raw material costs showing little significant movement, the supportive effect of lower feed costs on overall farm profitability has been limited.
On a positive note, improvements in domestic sow farming practices, leading to better production performance and efficiency, have contributed to lower weaned piglet costs. Enhanced management efficiency across the farming process has also helped reduce comprehensive breeding costs. Farming enterprises have made some progress in cost reduction and efficiency gains. For instance, MUYUAN has reported that through deepened health management and refined production controls, its hog farming costs have decreased year-on-year, with the cost for market hogs in May approximately 11.6 yuan per kilogram.
Piglet Sales Turn Unprofitable in Peak Season
Normally, the period following the Spring Festival gradually enters the peak season for piglet restocking. This is due to higher empty pen rates after small and medium farms conduct concentrated sales before the holiday, coupled with reduced fattening risks as temperatures rise. Furthermore, piglets restocked between March and June are scheduled for market between August and November, a period for which farmers often hold bullish price expectations, boosting demand. Typically, this leads to rising piglet prices post-holiday. Contrary to this pattern, piglet prices in 2026 fell after the Spring Festival instead of rising, with sales remaining unprofitable throughout the second quarter.
Data shows the national average price for a 7kg piglet in H1 2026 was 269.61 yuan per head, peaking at 364.28 yuan on January 30th and dropping to a low of 146.67 yuan on June 26th. The average profit from piglet sales in the first half was a loss of 7.22 yuan per head. In June alone, the loss deepened to 62.07 yuan per head. This shift into deep losses during the traditional peak season is accelerating the reduction of production capacity within the industry.
Full-Year Losses Anticipated for 2026
Although hog prices have seen a minor rebound at the start of the third quarter, they remain below the cost line in most regions. With Q3 traditionally being a low season for pork consumption, prices lack sustained upward momentum and are expected to stay below cost. As the industry moves into the peak consumption season in the fourth quarter, and with some relief from the pressure of abundant supply, hog prices may see a recovery. This could allow hog farming to return to a profitable state. It is projected that farrow-to-finish operations may transition from loss to profit in the second half of 2026. However, for the full year of 2026, the hog farming sector is still expected to be in an overall loss-making position.
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