In order to improve the comprehensive regulation mechanism for hog production capacity, the Ministry of Agriculture and Rural Affairs recently issued the "Implementation Plan for Comprehensive Hog Production Capacity Regulation (2026 Revision)." The plan specifies appropriately tightening the upper limits of the green and yellow zones and the lower limit of the yellow zone for the sow inventory, establishing a tiered and coordinated capacity regulation mechanism, strengthening production and market expectation guidance, and promoting a better match between hog market supply and demand. From a medium- to long-term perspective, the reduction in hog production capacity will continue, with inefficient capacity gradually exiting, and industry fundamentals are expected to enter a recovery path.
This plan comprehensively considers factors such as pork market supply and demand and improvements in hog production efficiency, setting the national normal sow inventory target at around 37.5 million head, marking another downward revision of the normal inventory target since February 2024. According to Mysteel agricultural product data, the national average price for outbound ternary hogs was 9.58 yuan/kg, remaining largely flat compared to the previous day. After the May Day holiday, hog prices were mainly weak and stable, far below the rebound expectations given by the industry in late April, leading to gradually dampened market sentiment.
Faced with the continuously bottoming hog market, policy efforts have strengthened the regulation of hog production capacity, continuously working to stabilize pig prices and reduce capacity. The performance of hog enterprises is expected to gradually improve. On April 28, the Ministry of Agriculture and Rural Affairs held a meeting to establish an expert advisory committee for hog industry monitoring and early warning. The meeting emphasized fully leveraging the role of this committee to further improve the production and market monitoring and investigation system, enhance the quality of monitoring data, strengthen market and expectation guidance, better guide and serve production, and promote the stable and healthy development of the hog industry.
On the same day, the Political Bureau of the CPC Central Committee held a meeting to analyze the current economic situation and economic work, mentioning the need to focus on agricultural production and stabilize the prices of agricultural products such as hogs. On May 11, relevant departments convened a symposium with several hog enterprises, associations, and experts to exchange views on current domestic hog production, pork circulation and consumption, import and export situations, and analyze the changing patterns of China's hog cycle, the risks and challenges faced, and future trends.
Caixin Securities pointed out that the clear statement from the Political Bureau meeting on stabilizing the prices of agricultural products such as hogs, combined with the Ministry of Agriculture and Rural Affairs' continuous efforts to strengthen hog capacity monitoring and early warning, helps enhance market confidence in policy support for the industry and a recovery in its prosperity. In the short term, the industry still faces pressure from the off-season for consumption and the release of supply, and the foundation for a rapid reversal in hog prices is not yet solid. In the medium term, with the continuous reduction in production capacity, weakening piglet data, and gradual improvement in the supply-demand relationship, both hog prices and industry profitability are expected to enter a recovery path.
The current persistently low hog prices are putting significant pressure on operating enterprises, leading to deep industry losses. As financial pressure on the breeding side continues to accumulate and large-scale enterprises deepen their capacity optimization and adjustment, the process of reducing the sow inventory is expected to accelerate. In 2025, the hog sector's operating revenue was 410.029 billion yuan, a year-on-year increase of 5.69%, while net profit attributable to shareholders was 16.645 billion yuan, a year-on-year decrease of 45.75%. In Q1 2026, revenue was 94.703 billion yuan, a year-on-year decrease of 1.52%, and net profit attributable to shareholders was -6.282 billion yuan, turning negative year-on-year. Since Q1 2024, the sector has once again experienced quarterly losses. Thanks to the optimization of corporate costs, despite hog prices hitting historical lows, the loss in Q1 2026 was relatively small historically.
Oriental Securities released a research report expressing optimism about the hog breeding sector, stating that after the confirmation of the bottom price during the off-season, pessimistic expectations are expected to gradually reverse. The bank is optimistic about hog price performance in 2026, and enterprises with leading cost advantages are expected to achieve continuous performance improvement. For the post-cycle sector, the industry's structural growth trend continues. After hog prices recover, profits in the breeding industry chain are expected to gradually transmit downstream, driving the animal health sector upward.
AVIC Securities believes that, driven by factors such as policy and breeding profits, the industry's capacity reduction trend is expected to continue, highlighting the allocation opportunity in the hog sector. First, the hog cycle continues to rotate, and with the guidance of "anti-involution" policies, capacity is expected to be reasonably reduced, supporting hog price expectations and the sector's performance. Second, the value attributes of leading enterprises in the hog industry are strengthening. Third, the dividend attributes of leading enterprises in the hog industry are strengthening. Fourth, leading hog enterprises are advancing globalization strategies.
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