In-Depth Market Research Report on Live Pig Industry: Prices Fall Below Historic Lows, Dilemmas and Solutions in Industry Winter

Swine Market In-Depth Research Report: Prices Fall Below Historical Bottoms, Industry Challenges and Breakthroughs in the Winter
Research Date: March 19, 2026
Research Area: Major production regions nationwide and key pig farming enterprises
Data Sources: Ministry of Agriculture and Rural Affairs, China Pig Farming Network, Boya Hexun, listed company announcements, brokerage research reports

1. Key Summary
   In mid-March 2026, China’s pig market is experiencing an unprecedented “winter.” Pig prices have fallen below 10 yuan/kg, approaching the lows of the past four pig cycles (9.9-10.5 yuan/kg), with the entire industry in deep losses. Despite prices being at historic lows, the pace of capacity reduction remains slow due to increased scale of farming, significant improvements in production efficiency (PSY/MSY), and stronger loss resistance of leading companies. The breeding sow inventory has decreased to 39.61 million, but productivity gains have increased actual supply pressure. Policy signals are strong, with plans to further lower the red line for breeding sow regulation to around 36.5 million, marking a shift from “scale expansion” to “efficiency competition” in the industry.

2. Main Content of the Research
   (1) Price Bottoming Out: Falling Below Cash Costs, Industry Enters Capital Consumption Battle
   Current pig prices have broken through all cost lines for breeding entities, leading to a market dilemma of “selling more losses” and “not selling means more losses.”

Spot and Futures Prices Both Plunge
As of March 18, the national spot price for external three-way pigs has fallen to about 10.29 yuan/kg, a nearly 15% decline year-to-date. The upcoming delivery futures contract 2603 even broke the 10-yuan psychological barrier, closing at 9.57 yuan/kg, with several contracts hitting new lows since listing. Prices are now very close to the lows of 9.9-10.5 yuan/kg seen in 2009, 2014, 2018, and 2021 cycles.

Industry Losses Continue to Widen

Leading Companies Under Pressure:
Companies like Muyuan and Wen’s have significant cost advantages, with average breeding costs around 12 yuan/kg in January-February 2026. This means even industry leaders experienced operational losses in February (selling at 11.59 yuan/kg), and losses are expected to further deepen in March by over 1 yuan/kg.

Small and Medium Farmers Under Strain:
According to Boya Hexun monitoring, as of the week ending March 13, the average loss per pig in self-breeding and self-rearing models has increased to 283 yuan. Based on a 120 kg slaughter weight, the value per pig is only about 1,250 yuan, illustrating significant losses.

Worsening Conditions:
Recently, prices of feed raw materials like soybean meal and corn have continued to rise, further increasing farming costs and squeezing cash flow for farmers.

(2) Slow Capacity Reduction: The “Double-Edged Sword” of Scale and Efficiency Revolution
Despite losses lasting over five months, capacity reduction remains slower than expected, mainly due to profound structural changes in the industry.

Enhanced Resilience of Large-scale Operations
Large farms leverage financing advantages and cost control to show strong resilience at cycle lows. In 2025, 20 listed companies’ commercial pig slaughter volume reached 180 million, a 20% increase year-over-year, with no signs of stopping expansion despite oversupply. This hampers market-driven capacity clearance, leading to a stalemate.

Significant Gains in Production Efficiency Offset Herd Reduction
Post-African swine fever, the industry has upgraded disease prevention systems, resulting in qualitative leaps in productivity.

PSY (pigs born per sow per year):
From 16.1 in 2020 to 26.34 in 2026, an increase of over 60%.

MSY (marketable pigs per sow per year):
From 13.4 in 2019 to 23.93 in 2026, an increase of over 70%.
This means that even with a decline in breeding sow inventory, the pressure of actual pig supply has not eased due to efficiency improvements.

(3) Cycle Reversal Still Requires Time: The “Last Mile” of Supply-Demand Rebalancing
The market generally believes that establishing a cycle turning point requires substantial supply contraction, which still takes time.

Breeding Sow Inventory Still Needs Reduction
By the end of 2025, the national breeding sow inventory was 39.61 million, below the previously revised target of 39 million, but due to productivity gains, actual supply remains excessive. Estimates suggest that to achieve new supply-demand balance, breeding sow inventory needs to further decrease to around 36.5 million, a reduction of nearly 8% from current levels.

Supply Pressure Remains Unresolved
In March 2026, sample enterprises plan to increase pig slaughter volume by 17.63% month-over-month, with regions like Shanxi and Jilin seeing increases of 40-60%. Meanwhile, after the holiday, consumption enters a traditional off-season, slaughterhouses’ sales rates decline, frozen inventory rises, and market absorption capacity is severely limited.

Futures Market “Near-Weak, Far-Strong”
Futures prices reflect this outlook. As of March 18, the LH2605 contract (near month) is at 10.57 yuan/kg, while contracts for July, September, and November are at 11.82, 12.82, and 13.01 yuan/kg respectively. This indicates that while the market expects short-term lows, there is optimism for recovery in the third and fourth quarters driven by consumption rebound and capacity reduction.

(4) Industry Response Strategies: Policy Regulation and Enterprise “Long-Term Battle”
Faced with a historic winter, industry players and policymakers are taking measures, shifting from passive endurance to active response.

Corporate Strategies: Cash Is King, Tight Defense

Cost Reduction and Efficiency Gains:
Leading companies like Muyuan are optimizing operations through closed management and smart upgrades to narrow the gap between costs and prices.

Winter Restraint Measures:
Most companies are preparing for a “long-term battle.” Wen’s has explicitly stated they are ready for prolonged low pig prices. Companies like Tainong Biological, Tianbang Food, and Huatong Co. are halting or reducing pig projects, reallocating funds to liquidity or other industries.

Industry Consolidation:
Cash-rich leading firms are acquiring competitors, such as Tainong Biological’s acquisition of Qiangdu Livestock, further increasing industry concentration (top 10 market share now at 30%).

Policy Side: Strengthening Constraints, Guiding Capacity Exit

Red Line Adjustment:
In early March 2026, the Ministry of Agriculture and Rural Affairs held a special meeting, signaling strong regulation, with plans to further lower the breeding sow target to around 36.5 million and establish capacity filing systems, transitioning from “soft guidance” to “hard constraints.”

“Anti-Overcompetition”:
Policy tone has shifted from “stabilizing production and supply” to “comprehensive regulation,” aiming to accelerate the exit of high-cost capacity and guide the industry back to reasonable profits from vicious competition.

3. Conclusions and Outlook
   This pig cycle exhibits features markedly different from previous cycles: prices have bottomed out, but the cycle itself has not.

In the short term (first half of 2026), oversupply pressure persists, compounded by rising feed costs and seasonal slowdown, likely causing pig prices to hover at low levels with continued losses. Only through ongoing losses forcing high-cost capacity to exit, combined with strict policy enforcement, can the industry achieve a painful but necessary supply-demand rebalancing.

For breeding entities, relying on cycle reversal to “gamble on the market” carries high risks; controlling costs, ensuring cash flow, and improving efficiency are the only paths through the winter. It is expected that in the second half of 2026, as capacity reduction effects become evident, pig prices may see a rebound. However, due to significant efficiency improvements, the rebound may be limited, and the industry will enter a new normal of stock competition under slim profit margins.