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Revisiting the “Pig Cycle”: Industry Cash Flow Is Drying Up, Supply Clearance May Arrive in a “Nonlinear” Manner

Revisiting the “Pig Cycle”: Industry Cash Flow Is Drying Up, Supply Clearance May Arrive in a “Nonlinear” Manner

华尔街见闻华尔街见闻2026/07/02 01:38
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By:华尔街见闻

1. What happened? — Multiple Historical Extremes Overlap, Industry Plunges into a “Bleeding” Abyss

Prices are under pressure across the board. As of June 26, 2026, the national average live hog price was 9.4 yuan/kg. After hitting a 20-year low of 8.67 yuan/kg in mid-April, it has continued to fluctuate at a low level within a narrow range of 9-10 yuan/kg, presenting a typical “bottom grinding” pattern. The piglet market has simultaneously collapsed—by June 23, the price of 7kg weaned piglets had dropped to 157 yuan per head, down 64% year-on-year and 13% month-on-month, deeply inverted relative to the industry cost line of 280 yuan per head.

Revisiting the “Pig Cycle”: Industry Cash Flow Is Drying Up, Supply Clearance May Arrive in a “Nonlinear” Manner image 0

Historical indicators are continuously being breached. As of June 24, the national hog-to-feed price ratio in major cities had dropped to 3.88, approaching the historic low set in April this year. The hog-to-feed ratio is the core metric for measuring farming profitability—6:1 is breakeven, below 5:1 is generally loss-making, and below 4:1 means the industry has entered a zone of extreme deep losses. The emergence of this historical extreme indicates that the sector is currently at a cyclical bottom.

Revisiting the “Pig Cycle”: Industry Cash Flow Is Drying Up, Supply Clearance May Arrive in a “Nonlinear” Manner image 1

The farming end is experiencing comprehensive and deep losses. As of June 26, under the self-breeding and self-raising model, the loss per head was 346 yuan, while in the model of purchasing piglets, loss per head was 339 yuan. Both models show similar loss depths, the second-deepest since 2014. The self-breeding and self-raising model has been losing money for over 9 consecutive months since September 2025, and the purchased piglet model for over 10 months. The industry has shifted from a simple “profit loss” to a continuous “cash flow drain,” with the entire sector in a systemic “bleeding” state.

Revisiting the “Pig Cycle”: Industry Cash Flow Is Drying Up, Supply Clearance May Arrive in a “Nonlinear” Manner image 2

2. Why does it matter? — Nonlinear Clearing Logic amid Cash Flow Exhaustion

1. Why did this bottoming process dramatically exceed expectations: the “dual trap” of oversupply and weak demand

The duration of bottoming in this cycle has far exceeded market expectations. The root cause lies in the structural mismatch between supply and demand.

On the supply side, the high inventory of breeding sows in the previous period, compounded by systemic leaps in production efficiency, have created a “double squeeze.” As of March 2026, the national inventory of breeding sows was 39.04 million, still 1.54 million greater than the latest Ministry of Agriculture and Rural Affairs' target of 37.5 million, indicating potential for further destocking. Meanwhile, industry-wide average PSY (pigs sold per sow per year) rose from 22.7 in 2023 to 24.3 in 2025, so improved farming efficiency has substantially increased output capacity with the same sow numbers.

Revisiting the “Pig Cycle”: Industry Cash Flow Is Drying Up, Supply Clearance May Arrive in a “Nonlinear” Manner image 3

In Q1 2026, national live hog slaughter reached 200 million, up 2.8% year-on-year, and pork production rose 4.2% versus the same period last year. Additionally, frozen meat storage utilization has climbed to a historical high of 32.96%, more than 15 percentage points higher year-on-year. This huge refrigerated inventory acts as a “barrier lake,” continuously suppressing any rebound in pork prices.

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Disclaimer: The content of this article solely reflects the author's opinion and does not represent the platform in any capacity. This article is not intended to serve as a reference for making investment decisions.

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