Against the backdrop of hog prices hitting new lows and slim profit margins across the industry, leading hog farming company Muyuan Foods Co., Ltd. experienced increased revenue without a corresponding rise in profits. The company recently released its 2025 annual report, showing annual operating revenue of 144.145 billion yuan, a year-on-year increase of 4.49%. However, net profit attributable to shareholders was 15.487 billion yuan, down 13.39% compared to the previous year. During an earnings conference, company executives stated that 2025 was "the most challenging period in recent industry cycles" for hog farming. Despite this, the company managed to reduce its full-cycle hog farming cost to 12 yuan per kilogram, and its slaughtering and meat business achieved an annual profit for the first time. For 2026, the company aims to lower its cost target to below 11.5 yuan per kilogram.
In detail, Muyuan Foods sold 77.981 million commercial hogs in 2025 and slaughtered 28.663 million hogs. The company sold 3.23 million tons of fresh and frozen pork products. Revenue from the slaughtering and meat business reached 45.228 billion yuan, a significant increase of 86.32% year-on-year, accounting for 31.4% of total revenue. This segment achieved profitability for the first time in 2025. Meanwhile, the company's full-cycle hog farming cost for the year was approximately 12 yuan per kilogram, a reduction of about 2 yuan per kilogram compared to the previous year.
Although the slaughtering business turned profitable and cost control measures showed results, the decline in hog prices continued to weigh on overall profitability. Muyuan Foods noted in its annual report that the primary reason for the drop in net profit was the decrease in hog prices. According to monitoring data from the Ministry of Agriculture and Rural Affairs, the average live hog price for 2025 fell to 14.44 yuan per kilogram, down 9.2% year-on-year, marking the lowest annual price since 2019. Calculations indicate that the average profit per hog sold in 2025 was 31 yuan, a decrease of 183 yuan compared to 2024.
Entering 2026, hog prices have continued to decline. Data from China Hog Network shows that since late February, hog prices have been falling persistently. By March 29, the national average price for outbred hogs had dropped to 10.1 yuan per kilogram. According to the latest data from the Ministry of Agriculture and Rural Affairs, during the third week of March, hog prices fell across all 30 monitored provinces, with the average price at 11.05 yuan per kilogram, down 28% year-on-year, hitting the lowest level since June 2018.
Sales data from the first two months of this year indicates ongoing operational pressure for Muyuan Foods. In January, the company's average selling price for commercial hogs was 12.57 yuan per kilogram, down 16.92% year-on-year, with sales revenue reaching 10.566 billion yuan, a decrease of 11.93%. In February, the average selling price fell further to 11.59 yuan per kilogram, with the year-on-year decline widening to 18.72%. Monthly sales revenue was 6.405 billion yuan, down 23.98% compared to the same period last year.
In response to persistently low hog prices, the company is focusing on further cost reduction to navigate the bottom of the cycle. During a recent earnings conference, Muyuan's Chief Financial Officer Gao Tong stated that, even considering potential slight increases in feed raw material prices, the company's cost target for 2026 is to achieve an average annual cost below 11.5 yuan per kilogram.
Additionally, Muyuan Foods indicated that in the current market environment, it will adopt a more prudent operational strategy, prioritizing cash flow safety and sustainable operations. The company's capital expenditure for this year is estimated to be around 10 billion yuan. Compared to last year, the company plans to increase capital expenditure in slaughtering operations, aiming to raise the self-slaughter ratio. Through coordinated management of breeding and slaughtering operations, the company intends to implement full value chain management to create additional value.
What are the reasons behind the declining hog prices, and how should stakeholders respond? Recent reports suggest that the continuous drop in pork prices results from a combination of factors. Wang Zuli, a researcher at the Chinese Academy of Agricultural Sciences and an expert with the National Pig Industry Technology System, stated that current hog supply is at a high level. He noted that China's hog production capacity was relatively high in the first half of last year, coupled with significant improvements in production efficiency in recent years. Following the African swine fever outbreak, many breeding enterprises have not only improved their breeding stock but also upgraded facilities like pens, leading to enhanced production capacity and disease prevention capabilities.
It is noteworthy that pork prices are highly sensitive to market supply and demand. Zhu Zengyong, a researcher at the Institute of Animal Sciences of the Chinese Academy of Agricultural Sciences, explained that the relationship between pork supply and market prices is not linear; a small change in supply can trigger significant price fluctuations.
Furthermore, pork demand has entered an off-season. "After the Spring Festival, the market typically enters a low season for pork consumption," Wang Zuli explained.
Industry insiders suggest that many breeders currently hold a pessimistic view of short-term hog prices. Faced with financial pressure, some are choosing to accelerate the pace of slaughter, which increases supply pressure in the short term and further drives down pork prices.
Zhu Danpeng, a Chinese food industry analyst, stated that China's hog prices remained low throughout 2025 for an extended period. This was partly due to an increase in the national pig inventory and partly influenced by reduced consumption and lower demand from the catering sector. Entering 2026, the industry is expected to strengthen macro-level control over inventory. Against this backdrop, the low-price cycle is anticipated to gradually narrow during the second and third quarters. By the third quarter, national hog prices may see a slight rebound, but the overall increase is expected to be limited, which is a normal manifestation of the industry cycle.
From the perspective of Jiang Han, a senior researcher at Pangoal Institution, extreme cost control is the core survival strategy for navigating the cycle. With hog prices at historical lows, companies must keep their full-cycle costs below the industry average. Furthermore, facing a prolonged bottoming-out phase, companies should leverage their financial stability to phase out inefficient capacity in an orderly manner, optimize herd structure, and increase investment in research and development for high-value-added products to escape homogeneous price wars through product differentiation. Additionally, companies should actively utilize financial derivatives like futures to lock in future profits and hedge against sharp fluctuations in spot prices. They should also vigorously expand their slaughtering and food processing segments, reducing reliance on the single breeding link through multi-business integration.
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