(Yicai) March 17 -- China’s listed pig breeders have been under financial pressure since the beginning of this year, as hog prices in the country plunged to the lowest since 2019.

Nineteen listed Chinese pig breeders have already released their sales reports for the first two months of the year, according to incomplete statistics from Yicai. Even though their total sales rose 9.9 percent to 30.4 million hogs in the period from a year earlier, their revenue remained under considerable pressure.

The spot hog price plunged nearly 15 percent to CNY10.29 (USD1.49) per kilogram yesterday from the beginning of the year, falling below the industry-wide cost line, close to the record-low of CNY10.26. Even the self-breeding and self-raising model, which has the highest cost advantage, has been unprofitable for five consecutive weeks, with losses widening to over CNY280 (USD41) per head this week.

Industry leader Muyuan Foodstuff sold more than 11.6 million hogs in the two months ended Feb. 28, racking in revenue of CNY1.1 billion (USD154.7 million) in January and CNY640.5 million (USD93.1 million) in February, down 12 percent and 24 percent, respectively, from a year earlier, mainly because of a sharp drop in the hog average selling price.

Wens Foodstuff Group’s sales neared 5.7 million hogs in the first two months. Its revenue in February reached CNY395.6 million, down 16 percent both from a month earlier and from a year earlier.

Oversupply, Soft Demand as Price Drags

The continuous decline in hog prices is mainly due to two factors: oversupply and weak demand.

The pig breeding industry’s capacity reduction has been slow, while inventories have remained high. China’s breeding sow stock exceeded 39.6 million heads as of Dec. 31, slightly above the target of 39 million set by the Ministry of Agriculture and Rural Affairs, according to official data.

Moreover, improved production efficiency has further exacerbated supply pressure. Despite the number of sows remaining basically unchanged, the actual output of commercial hogs kept rising.

In early March, the MARA and the National Development and Reform Commission held a special meeting with seven leading pig breeders, pledging to strengthen hog capacity regulation, according to a research note by Huaan Securities.

The target for breeding sow inventory this year may be lowered to around 36.5 million heads, down about 7.9 percent from the current level.

The industry is expected to bottom out in the second half of this year if the capacity reduction target is strictly implemented, and passive capacity cuts forced by deep losses are carried out, a private equity fund manager told Yicai.

The near-term outlook for hog prices remains pessimistic, as there is still further room for decline, mainly because hogs’ average slaughter weight is high, and the increase in newborn piglets will continue to exert pressure on sales in the first half of the year, the PE fund manager noted.

In addition, pork consumption has entered a traditional off-peak season after the Chinese New Year holiday, with a notable slowdown in terminal distribution, and prices of the two major feed ingredients -- soybean meal and corn -- have climbed to the highest since August 2024, adding considerable cost pressure to farmers.

Editor: Futura Costaglione