A live pig incurred a loss of nearly 400 yuan. Why are pig-raising stocks experiencing a significant surge?

(Source: Caixin)

          Hog prices have already fallen below 9 yuan.            

Since March, the hog market has been growing increasingly chilly, with the national average pig price continuing to trend downward—from “breaking 10” to “breaking 9,” falling step by step.

Entering April, the industry’s downtrend has not stopped. As of the week of April 6, hog prices had already fallen below the 9 yuan per kilogram threshold; losses per head for self-breeding and self-rearing were approaching 400 yuan, and the entire industry has fallen into deep losses.

However, the reaction from the capital market is in stark contrast to the industry’s cold conditions. On April 7, the pork sector surged; by the lunchtime session’s close, Huatuan Co., Ltd. (002840.SZ) and Juxing Agriculture & Animal Husbandry (603477.SH) both hit the daily limit up on strong gains, while Tiankang Biology (002100.SZ), Shennong Group (605296.SH), Longda Food (rights protection) (002726.SZ), and Delisi (002330.SZ) all followed higher. Related ETFs also saw synchronized volume expansion: Harvest ETF gained 2.30%, with trading volume of 15.78 million yuan, and GFA Livestock & Animal Husbandry ETF rose 2.35%, with trading volume of 24.03 million yuan. Even more notable, on April 7, the animal vaccine sector also exploded: China Animal Husbandry Co., Ltd. (600195.SH) hit the daily limit up, while Shenlian Biology (688098.SH) recorded a 20CM limit-up.

On one side, hog prices have fallen to freezing levels, and the whole industry is in deep losses; on the other side, pork stocks and veterinary medicine stocks are soaring together.

An awkward set of books for pig-raising companies

To understand the capital market’s contrarian positioning, one cannot help but mention the 2025 performance report that pig-raising companies have just submitted. Based on estimates, in 2025 the average profit per head of market hogs in the industry was only 31 yuan, down 183 yuan from 2024.

Taking industry leader Muyuan Foods (002714.SZ) as an example, in 2025 Muyuan Foods recorded operating revenue of 144.145 billion yuan, up 4.49% year on year; net profit was 15.812 billion yuan, down 16.45% year on year. In terms of slaughter volume, the company had 77.981 million head of market hogs for the full year, up 8.91% year on year, and its market share further rose to about 10.8%. In addition, although its slaughtering and meat processing business achieved annual profitability for the first time, the continued decline in hog prices still dragged down overall profit.

Tiankang Biology’s situation is also not optimistic. According to an earlier earnings forecast, the company expects attributable net profit for 2025 to be between 205 million yuan and 305 million yuan, representing a decline of 66.12% to 49.59% compared with the same period last year. Although its full-year hog output reached 3.19 million head, up 5.34% year on year, the sharp decline in hog sales prices caused profits from the breeding business to drop significantly year on year.

The case of Lihua Shares (300761.SZ) is even more typical. In 2025, the company’s hog output reached as many as 2.11 million head, up 63% year on year, making it one of the fastest-growing enterprises in the industry. Although Lihua stated in its announcement that in the first half of 2025 the hog market conditions were better than in the second half, and that its main business segments achieved profit complementarity across the two halves, partially offsetting the downward impact from the industry cycle, in its earnings forecast the company expects full-year net profit of 550 million yuan to 600 million yuan, with a year-on-year decline of more than 60%.

A series of figures are pointing to a fact: in 2025, scale expansion in the pig-raising industry is no longer a guarantee of profit. Entering 2026, as hog prices continue to fall, the industry-wide loss per hog is nearly 400 yuan, and companies’ cash flows are being consumed continuously.

Is the industry set for a bottoming rebound?

On the capital market side, from the policy perspective: on March 4, 2026, the first batch of central government reserves of frozen pork were put into storage and purchase; the scale was 10,000 tons. On April 3, the second batch of reserve purchases was implemented again at 10,000 tons. Although the absolute amount of reserve buying accounts for only about 0.16% of the national hog inventory, the core significance of the reserve policy is to release the intention of policy support to the market, aiming to curb panic selling and stabilize expectations on the breeding side.

More substantial than the reserve signal is the continued tightening of the capacity control targets. In 2025, the national target for the normal stock of breeding sows was reduced from 40.38 million head to 39.50 million head; in 2026, this target was further lowered to 36.5 million head, a further reduction of 3 million head. Regulatory authorities require annual production filing management for leading pig enterprises and unify data reporting standards to ensure that submitted data are true and traceable.

From the standpoint of institutional actions, in an investor relations management information announcement released by Tiankang Biology at the end of March, the company said that between March 20 and March 25 it received intensive research visits from 59 institutions, including CITIC Securities (600030.SH). An equity research report from Hu’an Securities (600909.SH) recently suggested that valuation for the hog sector is already at a historical low and has allocation value. Shanxi Securities (002500.SZ) believes that the hog industry may face pressure in the first half of the year, but it is also a relatively good time window for capacity reduction. Since the overall tasks of reducing leverage and repairing the asset-liability balance sheet have not yet been completed, continued low prices may further support market-driven capacity reductions. In 2026, there may be the third round of clearly noticeable capacity reduction since 2021, and the fundamentals and valuation of the hog-raising industry are expected to be repaired.

From the logic of transmission along the industry chain, the surge in the veterinary medicine sector on April 7 was, on the surface, driven by the H5N1 avian influenza outbreak triggering a rise in sentiment toward animal vaccines. But the deeper logic is that leading companies such as China Animal Husbandry Group are not only designated producers of avian influenza vaccines, but also core suppliers of vaccines for major animal diseases such as foot-and-mouth disease and highly pathogenic avian influenza. With reserve purchase policies supporting hog prices and capacity reductions accelerating, it implies that the prosperity of the hog-raising industry is expected to recover in the future. After profitability improves for breeders, their willingness and capacity to purchase upstream products such as animal vaccines and veterinary medicines will also strengthen.

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