"Egg" says it doesn't matter: Behind the pig-egg price linkage, the rise and fall of substitution advantages are hidden

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卓创资讯 poultry and egg market analyst Liu Hong

[Intro] Because pork and eggs are substitutable in terms of consumption, their prices are typically positively correlated, and the pork-to-egg price ratio can serve as a key indicator for measuring the degree of this substitution. In March, the pork-to-egg ratio fell from 2.07 to 1.46, and eggs’ relative low-price advantage is gradually weakening. In the second quarter, hog prices may maintain bottom-range volatility; although the egg market still has expectations of a seasonal increase in demand, the room for accelerated sales under hedging may face resistance or obstacles.

Periodic game under low positive correlation between hog and egg prices over the past five years

From a nutrition perspective, both pork and eggs are high-quality animal proteins, and there is some stickiness in consumers’ demand for both, providing a basis for mutual substitution. However, this substitutability is not simply a “one falls while the other rises” dynamic or a seesaw effect in end-market consumption. Instead, the market demand and prices of the two are more strongly driven and controlled by their respective industry internal capacity cycles, making it difficult to form a long-term, stable, and uni-directional substitution relationship.

Based on analysis of data from the past five years, over the long term hog and egg prices show a low positive correlation, with a correlation coefficient of 0.39, which also suggests that the price linkage between the two is not an iron law; the correlation in different years varies, reflecting the outcome of each industry’s cyclical game. For example, in 2021, supply surplus in the hog cycle and low-level capacity reduction in the egg cycle dominated; the key driver was the supply-demand contradictions within each variety, resulting in a substitution impact of “one falls while the other rises.” With hog prices dropping noticeably in this period, their cost-effectiveness became more prominent, which in turn weakened— to a certain extent— eggs’ appeal as a consumption substitute. In subsequent years, the capacity-cycle stages of the two gradually moved toward relative synchronization, or the conflicts were not prominent, and there is also a shared basis for changes in costs and macro environment occurring in step. Therefore, from 2022 to 2026, they generally show a medium-to-high positive correlation, with the correlation coefficient fluctuating within the range of 0.41 to 0.78.

In March, hog and egg prices show a high negative correlation, as eggs’ consumption appeal weakens

Rolling correlation analysis shows that within Q1 2026, the two prices maintained a positive correlation in January and February, with correlation coefficients of 0.15 and 0.95 respectively; however, in March the two prices turned to a high negative correlation, with a correlation coefficient of -0.90, mainly due to differences in supply-demand contradictions.

From the perspective of eggs, in March multiple bullish factors converged. After the Spring Festival, enterprise and institutional units resumed work and production, and schools reopened; group consumption and household demand entered a phase of recovery and improvement. At the same time, the laying-hen inventory itself is in a capacity-reduction cycle; supplies of small-code eggs from newly increased production are limited, indirectly supporting large-code egg prices. On top of that, with warmer weather becoming favorable for storage, both distributors’ and consumers’ willingness to stock up increased, jointly stimulating egg prices to rebound from their lows. By contrast, in the hog market, after the holiday hog supply gradually increases, and it coincides with a seasonal low in pork consumption, causing hog prices to decline continuously. As hog prices continued to fall, their absolute price advantage kept expanding. Although egg prices are still trending upward, their “cost-effectiveness” relative to pork is disappearing rapidly. This means that under the same amount of money, the gap in the quantity consumers can obtain from the two is shrinking quickly; eggs’ price advantage is weakening, which suppresses the pace of stock turnover and reduces the upward height of egg prices.

This dynamic can be directly evidenced by the “pork-to-egg price ratio.” According to historical data analysis, when the ratio is greater than 2 and the higher the value is, it means eggs have a significant price attraction relative to pork in the end market, thereby providing support to egg prices; conversely, when the ratio is below 2, support weakens and may even turn into a drag. From 2021 to 2025, the proportion of days when the pork-to-egg ratio was within 2 is close to 60% of the total days. This indicates that over most of the time in the long cycle, the absolute price gap between the two is not widened enough to trigger large-scale, sustained, directionally stable consumption substitution; prices are instead driven more by other shared factors. However, in the short cycle, the ratio between the two in 2026 gradually declines from 2.07 at the start of the year to 1.46. This implies that under the same amount of money now, eggs’ price advantage is weakening. If the ratio continues to stay low or keeps moving downward, theoretically it may lead some demand to flow back to pork, thereby suppressing the upward momentum of egg prices from the consumption side.

In the second quarter, the outlook for hog prices relative to egg market performance may be hard to call optimistic

The pork-to-egg price ratio continues to come under pressure and may form a bearish impact on the egg market. Currently, hog slaughter weights are at a high level. As temperatures gradually rise, demand for heavy-weight hogs weakens. In the future, slaughter weights are expected to decline, and the pressure of abundant hog supply in the second quarter will still exist. However, considering that industry players’ expectations are insufficient, secondary fattening and replenishment and the warehousing of frozen pork may still be relatively cautious, making it difficult to provide a clearly noticeable support to hog prices during the off-season. Therefore, it is expected that at the beginning of the second quarter, hog prices may still remain at the bottom, with the national average hog price adjusting within 9.3–10.2 yuan per kilogram.

With eggs under expectations of a capacity-reduction cycle and seasonal growth in demand, their price focus still has expectations of a slow lift from low levels. But compared with hog prices, theoretically the pork-to-egg price ratio may still have room to decrease; eggs’ substitution effect on hogs weakens, which to a certain extent suppresses the strength of price increases, and increases pressure on market deliveries. Therefore, it is expected that the impact of hog prices on the egg market in the second quarter may continue to follow a bearish tone. While the egg market may not lack rising activity in its own demand, under the “pork is weak” ratio-price environment, the magnitude of an independent upward move in eggs will be limited. Egg prices may show a volatile pattern of “pressure from above, support from below,” with mainstream prices likely fluctuating and adjusting in the range of 3.30–3.60 yuan per jin.

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Responsible editor: Li Tiemin