China Galaxy Securities released a research report stating that pressure on the breeding sow inventory in 2026 has eased slightly, but farming efficiency metrics, such as pigs weaned per sow per year (MSY), continue to improve, albeit at a slower pace. This suggests a significant increase in total hog slaughter volume for 2026, implying a year-on-year decline in the average hog price for the same period. In the short to medium term, considering rising costs and historically low hog prices, farms and farmers are under pressure from both sides. With the supply-demand imbalance remaining acute, the report suggests that persistent losses will accelerate the reduction of production capacity, laying the groundwork for a potential sharp rebound in future hog prices. The industry competition has now entered a stage focused on refined management. Combined with the relatively low valuations in the pig farming sector, the report specifically recommends major producers such as Muyuan Foods Co., Ltd. and Wens Foodstuff Group Co., Ltd., as well as smaller to mid-sized producers like Tecon Biology Co., Ltd. and Shennong Group Co., Ltd. It also advises monitoring Dekon Agri and other high-quality pig farming companies within the sector. The main views of China Galaxy Securities are as follows:
The agriculture, forestry, animal husbandry, and fishery sector is under pressure, with the breeding industry poised for a potential upturn. From the beginning of 2026 to April 17th, the crop farming and animal health sub-sectors performed relatively well, with gains of 5.22% and 1.59% respectively. In contrast, the feed and fishery sub-sectors lagged, declining by 5.32% and 8.33% respectively. During this period, the pig farming index fell by 3.27%. For 2026 cycle allocation, the report recommends actively investing in high-quality breeding stocks during the current period of sustained industry losses, awaiting the significant potential rebound from a future cycle reversal.
In 2025, the market share of listed pig farming companies reached a new high, while pressures from both prices and costs increased in the first quarter of 2026. In 2025, 16 listed pig enterprises collectively marketed 194 million hogs, a year-on-year increase of 16.8%. Their combined market share reached 26.9%, a historic high and an increase of 3.5 percentage points year-on-year. Since 2025, the industry has entered a second wave of accelerated market share concentration, where leading companies, benefiting from continuous cost optimization, maintain leading profitability and widen the gap even under price pressure. In the first quarter of 2026, these 16 listed companies marketed 47.89 million hogs, up 9.4% year-on-year but down 10.7% quarter-on-quarter. The average wholesale price of corn was 2.33 yuan/kg, up 7.9% year-on-year and 2.2% quarter-on-quarter. The average price of complete feed for fattening pigs was 3.38 yuan/kg, flat year-on-year but up 0.6% quarter-on-quarter. Overall, hog prices continued to decline quarter-on-quarter, while rising costs intensified the pressure on producers.
The contradiction between hog supply and demand is becoming more apparent, with monthly losses accelerating the reduction of production capacity. In March, the 16 listed pig enterprises collectively sold 17.77 million hogs, an increase of 39.7% month-on-month and 9.1% year-on-year. Major producers like Muyuan Foods and Wens Foodstuff saw their slaughter volumes increase by 46.7% and 36.6% month-on-month, respectively; most small and mid-sized producers also reported increases both month-on-month and year-on-year. On the price front, monthly hog prices for listed companies have been declining since the start of 2026 and are significantly below the industry average. The average slaughter weight has increased notably. In terms of profitability, low March hog prices led to intensified losses across the entire pig farming industry. Although leading companies maintain a relative advantage in cost control, comprehensive losses have become unavoidable against the backdrop of new price lows. As breeding losses deepened in April, industry capacity reduction is expected to accelerate.
Analyzing the capacity and efficiency framework reveals insights into short and long-term hog price trends. Hog slaughter volume is primarily determined by production capacity and farming efficiency. The average effective breeding sow inventory for 2026 is estimated at 40.08 million head, a decrease of 350,000 head year-on-year, with the rate of decline slowing. Based on multiple assumptions, the report estimates the industry MSY for 2026 to be approximately 18 to 18.5 head. These estimates do not account for the potential impact of the Foot-and-Mouth Disease Serotype SAT1 virus detected in China at the end of March; subsequent MSY estimates will be adjusted as more information becomes available. Based on this, the report estimates the potential range for 2026 hog slaughter volume to be 720 million to 740 million head, suggesting the annual average hog price could see a significant decline. In the short to medium term, hog prices may experience rebounds but are expected to return to a pattern of low-level fluctuations within the year.
Risk warnings include the potential for livestock and poultry prices to fall short of expectations, risks associated with animal diseases, volatility in raw material prices, policy risks, and risks from natural disasters.
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