Accumulation! Pork stocks surge! Institutions: The industry is experiencing dual pressures

Ask AI · What industry dilemmas are behind the slow de-leveraging of breeding sows?

China News by Jingwei, April 2 (Zhongxin Jingwei, April 2) — On April 2, A-share stocks related to pork rallied sharply.

By midday, Juxing Nongmu rose more than 8%, Dayu Biotech rose more than 7%, Huisheng Biotech rose more than 6%, Shennong Group rose more than 5%, Haitai Group rose more than 4%, Tiankang Biological, Muyuan Co., Lihua Co., and Huatong Co. rose more than 3%, while W. H. Smith Development and others collectively surged.

Source: Oriental Fortune

Earlier that day, the Ministry of Commerce said in a statement on its website that, to maintain stable operation in the pork market and better leverage the role of central government reserves, the Ministry of Commerce, the National Development and Reform Commission, and the Ministry of Finance are currently carrying out the central reserve frozen pork purchasing and storage program. Next, the Ministry of Commerce will continue to closely monitor pork market conditions, strengthen trend assessments, work with relevant departments to do reserve-driven stabilization and ensure stable operation of the market.

Previously, relevant bureaus under the National Development and Reform Commission and the Ministry of Agriculture and Rural Affairs organized a symposium with pig-breeding enterprises to analyze and assess the price situation and arrange work on market stabilization. The meeting pointed out that, influenced by factors such as the post-holiday decline in consumption demand, hog prices have fallen and have already entered the early-warning zone for excessive declines.

CITIC Securities said that as of March 27, 2026, pork prices had fallen to around the lowest level since May 2018. At that time, it was a cyclical “bottom,” followed by a rebound. The difference from 2018 is that since 2021, China’s pig-breeding industry has seen a major increase in scale and production efficiency; however, the de-leveraging of capacity has been slow, and supply-demand rebalancing has still not been completed to date. As a result, in the medium to long term, it is still hard to say that hog prices will turn around.

Nanhua Futures analyzed that, from the supply-and-demand fundamentals, the industry is undergoing a dual squeeze: oversupply on the supply side and weak demand on the demand side. On the supply side, there is an unprecedented “supply flood peak.” The prolonged high level of the inventory of breeding sows combined with improvements in production efficiency has kept the number of hogs ready for sale at a high level. The sample enterprises’ pig-sales plans increased significantly on a month-over-month basis, and in some regions the growth exceeded 40%. However, the demand side is extremely weak. The post-holiday consumption off-season, together with the “double extinguishing” of second-stage fattening and frozen product inventory build-ups—both of which historically could provide support at low levels—means that the support momentum is completely absent. More critically, although the entire industry has been operating at a loss for more than five months in a row, the rate at which breeding sow inventories are de-leveraging is unusually slow, and even shows a month-over-month rebound. This indicates that breeding entities are still “waiting out the cycle” rather than genuinely de-capacitating. A dangerous time gap has formed between losses and de-leveraging.

Looking ahead, Zhonghui Futures believes that in the second quarter, hogs are concentrated for sale and the consumption off-season continues, so hog prices will mainly grind at the bottom and rebound room is limited. In the second half of the year, as the de-leveraging effect from breeding sows gradually transmits, and seasonal consumption picks up around the Mid-Autumn and National Day periods, the supply-demand pattern should improve at the margin, and the price center of gravity could rise. However, constrained by limited de-leveraging magnitude, the upside will still be capped. (China News by Jingwei APP)

(The views in this article are for reference only and do not constitute investment advice. Investing is risky; proceed with caution when entering the market.)