Recently, due to hot summer weather and seasonally weak consumption, coupled with the earlier slaughter of twice-fattened pigs, pork market supply has increased, leading to a slight decline in live pig prices. According to monitoring by the National Development and Reform Commission, the national average pig-to-grain price ratio has recently fallen below 6:1, entering the third-level warning zone as stipulated in the "Plan for Improving Government Pork Reserve Adjustment Mechanism and Ensuring Market Supply and Price Stability." To promote stable operation of the live pig market, the National Development and Reform Commission will work with relevant departments to launch central frozen pork reserve procurement in the near future. Related concept stocks include: DEKON AGR (02419), COFCO JOYCOME (01610), and WH GROUP (00288).
It is reported that the pig industry's capacity reduction curtain has been raised. The latest dispatch from the Ministry of Agriculture and Rural Affairs shows that China's pig production capacity is currently at a periodically high level. To prevent significant fluctuations in production and prices, comprehensive pig capacity regulation will be implemented, guiding the reduction of approximately 1 million breeding sows. The breeding sow inventory serves as the "master switch" for pig supply, directly determining the scale of commercial pig slaughter 10 months later. If breeding sow inventory is reduced, pig slaughter volume will correspondingly decrease 10 months later. This means that pig slaughter will significantly increase in the second half of this year and after next year's Spring Festival. Due to the natural growth cycle of pigs, starting capacity reduction now will take effect 10 months later.
Against the backdrop of weak domestic pork demand and strong supply, pig prices have continued to decline this year, especially since entering the pork consumption off-season in July, with sluggish consumption causing prices to fall further. In fact, multiple policies have been introduced this year, advocating for the industry to reduce breeding sows, control secondary fattening, and reduce weight, releasing positive policy signals.
On July 23, the Ministry of Agriculture and Rural Affairs held a symposium on promoting high-quality development of the pig industry, inviting leading breeding and slaughter enterprises including Muyuan, New Hope, CP Group, Dekon, Shuanghui, and Jinluo. During the meeting, Party Secretary and Minister Han Jun stated that the pig industry currently faces problems of periodically excessive capacity and high risks of production and price fluctuations. It is necessary to strictly implement capacity regulation measures, reasonably eliminate breeding sows, appropriately reduce breeding sow inventory, reduce secondary fattening, control slaughter weight of fat pigs, and strictly control new capacity additions.
In early June, the Ministry of Agriculture and Rural Affairs held a pig production dispatch meeting, reducing supply in the second half of this year by lowering average slaughter weight and limiting basic capacity by reducing 1 million head to stabilize supply in the first half of next year. By the end of May, relevant departments had promoted the orderly exit of backward capacity, with multiple leading pig enterprises receiving requirements from relevant departments to suspend breeding sow expansion, with slaughter weight also needing to be controlled at around 120 kilograms.
The core of the pig industry's anti-involution lies in supply-side capacity. Wang Zuli, chief expert of the pig industry monitoring and early warning system of the Ministry of Agriculture and Rural Affairs, stated: "The pig industry is currently conducting capacity regulation to alleviate supply pressure in the second half of this year and even next year. Currently, the industry is indeed responding to national guidance. We have monitored a decline in slaughter weight in June, and secondary fattening sentiment is currently cautious and rational, with total capacity within the green reasonable zone set by the regulation plan. Capacity regulation can stabilize industry expectations; when expectations are stable, capacity can be stabilized, and market conditions can also be stabilized."
July listed company sales data showed month-over-month increases in average selling prices. Muyuan Co., Wens Foodstuff Group, Zhengbang Technology, and New Hope achieved average pig selling prices of 14.30, 14.58, 14.31, and 14.44 yuan/kg respectively in July, with month-over-month changes of 1.56%, 1.32%, 1.85%, and 1.83% respectively.
Slaughter volume declined month-over-month. Muyuan Co., Wens Foodstuff Group, New Hope, and Zhengbang Technology achieved pig sales of 7.5 million, 3.16 million, 1.30 million, and 0.70 million head respectively in July, with month-over-month changes of -10.40%, 5.24%, 2.07%, and -2.16% respectively. July slaughter volume showed more declines than increases, with month-over-month decline related to good piglet market conditions and large sales at the beginning of the year, as companies reduced self-retained fattening pig slaughter.
Average slaughter weight decreased. Muyuan Co., Wens Foodstuff Group, and New Hope had average slaughter weights of 108.57, 105.69, and 95.81 kg respectively in July. Except for Shennong Group and Dongrey Co., all companies showed month-over-month decreases in average slaughter weight, with the industry trend of reduced weight slaughter continuing.
Muyuan Co. stated in its semi-annual earnings conference that recently, to balance market supply and demand and promote stable pig price operation, the country has implemented comprehensive pig capacity regulation. The company has responded to the call by reducing breeding sow inventory scale, expecting to decrease to 3.3 million head by year-end. Regarding next year's breeding sow quantity planning, under the guidance of the current capacity regulation plan, the company does not consider adding new sows in the short term. Additionally, in managing pig slaughter weight, the company has continuously reduced average weight recently, expecting to decrease to 120 kg by the end of this month. On the sales side, the company controls from the source, ensuring all fattening pigs flow to slaughterhouses. The company will actively play a leading role in capacity regulation to promote stable pig price operation.
From an industry supply and demand perspective, Kysec Research believes that July itself is already in the core period of the supply contraction window. After retail investors oversell large pigs, their intention to buy pigs at low prices may fail and become a further force driving pig price increases. Pig supply contraction in Q3 2025 has arrived, and the pig price center is expected to rise month by month.
From a policy perspective, Huafu Securities points out that this round of policy regulation may accelerate the exit of inefficient capacity in the industry, with long-term pig price centers expected to rise, and cost-leading enterprises expected to obtain excess returns.
A research report states that as of August 18, the national average pig price was 13.55 yuan/kg, down 0.21 yuan/kg from the previous week, with prices continuing to decline throughout the week and hitting new annual lows. Recently, supply-side capacity release has been active, but demand reception has been weak. In the short term, pig supply in the second half of 2025 has been determined by capacity from the second half of 2024 to the first half of 2025. During this stage, breeding stock inventory and newborn piglet quantities have both increased month-over-month, with supply pressure expected to be significant in the second half of 2025, especially in Q4. Policy support may slow the pace of pig price decline. The concentrated effect of policies may not appear until the second half of 2026, when pig price centers are expected to rise.
Related concept stocks:
DEKON AGR (02419): DEKON AGR announced that in July 2025, the company sold 780,200 pigs (including 741,900 commercial meat pigs) with sales revenue of RMB 1.427 billion. In July 2025, the company's average commercial meat pig selling price was RMB 14.21/kg, down 0.70% from June 2025. For the seven months ended July 31, 2025, the company sold a total of 5.8975 million pigs (including 5.5862 million commercial meat pigs) with sales revenue of RMB 11.449 billion.
COFCO JOYCOME (01610): COFCO JOYCOME announced that in June 2025, the company slaughtered 427,000 pigs, with a cumulative total of 2.898 million for the year. Fresh pork sales volume was 24,500 tons, with brand revenue accounting for 33.56% of fresh pork business, and average commercial large pig selling price at 14.08 yuan/kg.
WH GROUP (00288): In July, CICC released a research report maintaining WH GROUP's core attributable net profit forecasts of $1.614 billion and $1.683 billion for 2025/2026. The company trades at 8.1/7.8x 2025/2026 P/E; maintaining target price of HK$8.56/share, corresponding to 8.7/8.4x 2025/2026 P/E and nearly 7.8% upside, maintaining outperform rating. The firm expects WH GROUP's Q2 2024 operating profit on a comparable basis to potentially grow in low double digits year-over-year (excluding the impact of government subsidies in Q2 2024 US operations), in line with market expectations.