Lean Hog Futures Main Contract Hits a New Low; Industry Capacity Regulation Still Needs to Continue

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On March 19, the domestic futures market for live hogs saw another decline. By the close, the main contract for live hogs, 2605, was at 10,335 yuan/ton, with a intraday low of 10,250 yuan/ton, hitting a new low since listing.

Live Hog Spot Prices Down 30.6% Year-over-Year

According to Souhuo.com data, on March 18, the average price for lean pigs at slaughter nationwide was 10.07 yuan/kg, up 0.03 yuan/kg from the previous day’s 10.04 yuan/kg, a 0.3% increase; but compared to the same period last year at 14.51 yuan/kg, it has dropped 4.44 yuan/kg, a 30.6% decrease.

Shanghai Steel Union data shows that since 2026, live hog prices have generally experienced an initial rise followed by a decline, continuing to hit bottom. In early to mid-January, prices briefly surged to 13.15 yuan/kg. After the Spring Festival, due to oversupply and weak demand, prices plummeted. By mid to late March, the average price for external three-way cross pigs nationwide had fallen below 10 yuan/kg, reaching a new low since 2019, with a cumulative decline of over 24% this year, leading to deep industry losses.

In this context, industry sources report that on the 19th, relevant departments held a meeting requiring several pig enterprises to report their annual production targets. Based on the completion of reducing the breeding sow inventory for the year, they will also cut the annual slaughter volume.

“Based on data from the Ministry of Agriculture and Rural Affairs and Zhuochuang Information, it is expected that pig prices will start to rise in the second half of 2026. However, current policies still anticipate capacity regulation, and breeders may adjust sow breeding rates to control pig output, thereby reducing corporate losses,” said Zou Yingji, pig analyst at Zhuochuang Information.

Breeding Scale at Historic Highs

Zou Yingji noted that over the past five years, the trend in pig prices has experienced two small cycles. The impact of pig diseases on the market has gradually weakened, and profit-driven capacity changes have caused price fluctuations, which are narrowing. Prices are currently in a downward oscillation. Due to capacity release, the industry’s breeding scale is at a historic high. The low pig prices are mainly due to the previous high levels of breeding sows, which correspond to high slaughter volumes. Additionally, since March is after the Spring Festival, demand is typically weak, pushing prices to new lows.

Shanghai Steel Union analyst Yuan Chunlan stated that the current domestic pig market is characterized by oversupply, with the industry under significant supply pressure. From a capacity perspective, the number of breeding sows remains above regulatory targets, and with continuous improvements in breeding efficiency, the industry’s overall supply capacity remains high, supporting current and future slaughter volumes.

Mysteel data shows that in key provinces, large-scale breeding enterprises’ pig slaughter plans in March increased by 17.63% month-over-month, with a clear acceleration in slaughter pace. Coupled with the large stock of pigs held back in earlier stages, and the ongoing clearance of heavy-weight pigs, market supply is further expanded, and short-term pig prices still face strong supply pressure.

Persistent Losses in Breeding Industry

Since late January this year, the pig breeding sector has been in continuous loss. Data from Zhuochuang Information indicates that in mid-March, the average loss per pig was about 225 yuan.

“Losses in the breeding sector do not necessarily mean pig prices have bottomed out, but current prices are already relatively low, and further declines are unlikely to boost demand. Even with moderate market sales, breeders are reluctant to lower prices further. On March 17, the nationwide average price for lean pigs monitored by Zhuochuang was 10.08 yuan/kg, leaving little room for further reduction,” said Zou Yingji.

Regarding the overall price trend for pigs in 2026, Shanghai Steel Union analyst Qu Guona predicts that prices will likely follow a pattern of initial decline, then rise, with oscillations. Since the first half of the year is still a capacity release period, combined with weak demand, prices will remain low and stabilize. After the third quarter, if capacity reduction becomes evident and consumption gradually recovers, prices are expected to stabilize and rise. In the fourth quarter, seasonal peak demand will support a stronger trend, partially recovering previous losses and further increasing prices.

Cinda Futures’ latest analysis suggests that it will take a longer time for pig prices to bottom out. Data shows that at the end of January 2026, the nationwide breeding sow inventory was 39.58 million, a slight decrease month-over-month. The pace of sow capacity reduction is significantly slower than in 2021 and 2023. Additionally, the number of piglets born in sample enterprises at the end of January was 5.7804 million, still increasing month-over-month, indicating supply-side uncertainties for the second half of 2026.