Hog futures continue to fall as supply growth outpaces demand

Despite the approaching Mid-Autumn Festival and National Day holidays, hog market prices have failed to gain support from seasonal demand.

Since late August, domestic hog futures prices have been steadily declining. On September 22, the main hog futures contract (2611) hit an intraday low of 10,865 yuan per ton, down over 9% from the beginning of the month and more than 22% from its peak this year.

Although hog market demand has picked up recently, supply-side growth has outpaced demand growth, putting downward pressure on prices. However, data indicates that production capacity reduction has accelerated in the third quarter. In the second half of September, as holiday stocking begins in earnest, terminal demand is expected to recover quickly, potentially improving the short-term supply-demand balance and halting the price decline.

Prices Under Pressure Before Holidays

Since September, domestic hog prices have continued to weaken, with the market under significant pressure.

According to data from Souzhu.com, the national average price of lean hogs for slaughter was 10.58 yuan per kg on September 22, down 2.11 yuan per kg from 12.69 yuan per kg in the same period last year, a year-on-year decline of 16.63%.

"Concentrated slaughtering on the breeding side has led to a substantial increase in hog supply, while terminal consumption has only seen a modest recovery. The pace of回暖 is insufficient to match supply growth, resulting in price declines," said Fan Qingqing, an analyst at Zhuochuang Information. Survey data shows that the planned slaughter volume of sample enterprises in September increased by 2.96% month-on-month. Additionally, due to the National Day holiday in October, the effective number of slaughter days is only about 20 days. To avoid post-holiday market uncertainty, most breeding enterprises have chosen to slaughter early and release inventory ahead of schedule, leading to high overall slaughter enthusiasm. Combined with散户 following suit, the market's hog circulation volume has increased significantly, with ample inventory of hogs for sale, creating a clear oversupply situation that continues to suppress spot hog prices.

Although lower temperatures in September have boosted terminal consumption, and the start of the new school semester has steadily restored campus and restaurant dining demand, the recovery in pork demand has been relatively weak, only supporting basic daily sales without significant growth.

Souzhu.com analysis indicates that while the approaching holidays have marginally boosted downstream food enterprise stocking, household consumption has fallen significantly short of expectations. Downstream traders remain generally cautious, mostly purchasing on an as-needed basis. Insufficient demand-side support has failed to drive hog prices higher.

Furthermore, high frozen product inventory has further amplified the price stalemate. Low-priced frozen products being sold off have continuously diverted fresh meat consumption, further suppressing fresh meat price increases.

"Current market downstream white条 pork sales are slow, slaughterhouse inventory digestion is sluggish, and most are adopting a production-to-sales model with low willingness to raise prices for hog procurement. The demand side cannot provide effective support. Meanwhile, domestic frozen pork inventory remains high, with ample reserves. Once spot hog prices rebound slightly, low-priced frozen products will be released in volume, directly blocking any price recovery," Fan said.

Accelerated Capacity Reduction

Since 2026, domestic hog prices have remained persistently low, with hog farming in a prolonged loss-making state.

As of September 16, the average profit from self-breeding and self-slaughtering in 2026 was -200.7 yuan per head, down 275.66 yuan per head from 2025. Since hog farming entered a loss-making state in mid-September 2025, the loss cycle has lasted for one year.

"As of the end of August, the national average price of piglets had fallen to the year's low range. Persistent losses in fattening operations continue to suppress补栏 enthusiasm," said Wang Hailian, an analyst at Shanghai Ganglian. In late June, the price of 7-kg piglets once fell to between 140 yuan and 160 yuan per head, breaking the cost line for most self-breeding farms. Farmers' bearish sentiment spread, leading to a sell-off of piglets. Although a阶段性 price increase in July drove a brief rebound in piglet prices, the uptrend lasted only half a month. As of the week ending September 17, the national average price of 7-kg weaned piglets was only 136.19 yuan per head, with a loss of 79.28 yuan per head for those purchasing piglets for fattening.

Under loss pressure, the breeding side began accelerating the elimination of sows in the third quarter, with the decline in the number of breeding sows speeding up.

"As of the end of August, the breeding sow inventory of Zhuochuang Information's 196 sample enterprises was 8.5083 million heads, down 1.61% month-on-month and 7.11% year-on-year," said Zhu Zekun, an analyst at Zhuochuang Information. He believes the current capacity reduction cycle may be nearing its end. The current cycle has lasted 14 months, with a cumulative reduction幅度 greater than the 2023 cycle but smaller than the 2021 cycle. In September, the breeding side has continued to accelerate sow elimination, and the breeding sow inventory is expected to continue its downward trend.

Large group enterprises have also been accelerating capacity reduction in recent months.

Muyuan Foods previously stated that the company is actively responding to the national call for hog production capacity regulation, planning to reduce its breeding sow inventory to below 3 million heads by the end of September, a decrease of about 600,000 heads from last year's peak.

New Hope Group stated that the company is strictly responding to national production capacity regulation policies, and its annual slaughter volume this year will be reduced compared to 2025, with a full-year slaughter volume of approximately 16 million heads.

Wens Foodstuff Group recently stated that the current industry capacity reduction is real and effectively advancing, driven by both policy and market forces. On the policy side, the state attaches great importance to hog production capacity regulation, issuing multiple measures and plans to promote implementation with strong enforcement. On the market side, the industry has been loss-making for many consecutive months, with significant financial pressure, providing ample motivation for industry participants to voluntarily reduce capacity.

Short-Term Demand Expected to Improve

The Ministry of Agriculture and Rural Affairs recently released the "15th Five-Year Plan for the Development of the National Animal Husbandry and Veterinary Industry," proposing the implementation of常态化 and precise regulation of hog production capacity, dynamically adjusting the national target for normal breeding sow inventory, and guiding supply-demand alignment. The plan proposes分级 linkage capacity regulation between the ministry and provinces, incorporating leading enterprises with breeding sow inventories of over 100,000 heads and large-scale farms with breeding sow inventories of over 500 heads into the ministry-level and provincial-level hog production capacity regulation scope, respectively.

Wens Foodstuff Group expects that as the industry capacity regulation mechanism is gradually implemented,无序 competition in the industry will significantly decrease, gradually forming a relatively stable competitive landscape. Cycle fluctuations are expected to narrow, and the industry may enter a stable phase of earning reasonable returns, with participants possessing cost advantages likely to capture excess profits.

In a recent investor relations activity record, the company mentioned that hog prices have been低迷 for a long time. Regarding the specific timing and magnitude of a cycle reversal, there is some divergence between the industry and market sides. Preliminary estimates suggest that hog prices may see a inflection point around the Spring Festival.

The industry generally expects a relatively high certainty of profitability in 2027, with the level of profitability depending on hog price trends in the third and fourth quarters of this year and the progress of industry capacity reduction. Historical experience shows that the longer hog prices remain low, the more thorough the capacity reduction, and the greater the accumulated energy for subsequent price recovery. If the industry still fails to achieve profitability next year, widespread capacity clearance may occur, potentially leading to a rapid price increase phase.

"Price declines in the first half of September were primarily due to a阶段性 mismatch between concentrated supply release and尚未启动 holiday demand. In the second half of the month, as concentrated holiday stocking fully begins, terminal demand will recover quickly, improving the short-term supply-demand balance, and hog prices are expected to stop falling and rebound," Fan Qingqing said regarding the short-term market outlook. She believes that in late September, hog prices will generally show a trend of rising first and then falling. However, after the Mid-Autumn Festival, the stocking dividend will quickly fade, terminal demand will decline again, and with the overall loose supply pattern unchanged, hog prices will come under pressure again.

Shanghai Dalu Futures Investment Consulting Department also believes that there is no substantial positive support in the recent hog market to drive a全面 recovery in terminal meat demand. Under the pressure of ample supply and weak demand, hog prices have continued to decline and probe the bottom. However, amid pessimistic sentiment in the spot market, the current period is a verification node for capacity reduction policies. Accelerated sow elimination at both group and social levels, combined with panic sentiment at the cycle bottom in September, may lead to social-level capacity reduction exceeding expectations under the dual drive of policy and profit. After overshooting, a short-term bottom may emerge, with震荡反弹 expected after the end of September.