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This report (chinatimes.net.cn) reporter Ye Qing reports from Beijing
Affected by the oversupply of live pigs and weak demand during the off-season, live pig futures have recently shown an overall downward trend, with spot and futures prices weakening in tandem. On April 9, the live pig futures contract 2605 opened at 9,220 yuan/ton, dipping to 9,115 yuan/ton during the day, and closing at 9,195 yuan/ton, a daily decline of 0.97%, remaining in a weak pattern overall.
&#34;Due to the continuous decline in live pig spot prices, live pig futures prices have also seen a significant drop recently, with near-month contracts hitting a record low since listing. Especially for the far-month high valuation contracts, under the backdrop of pig prices falling into a deep loss zone, the prices of piglets also remain weak. Meanwhile, due to the industry's downward adjustment of pig price expectations, far-month futures contracts have also experienced a significant decline,&#34; said Hou Xiaorui, a futures analyst at Yide Futures, in an interview with the China Times.
Supply and Demand Contradictions Continue to Intensify
According to monitoring data from the Ministry of Agriculture and Rural Affairs, the national average price of live pigs fell to 10.68 yuan/kg in the fourth week of March, with some regions even dropping below 10 yuan/kg, hitting an eight-year low. In this regard, Chen Rentao, an analyst at Chuangyuan Futures, stated in an interview with the China Times that the continuous decline in live pig prices is fundamentally due to oversupply. Especially after the Spring Festival, entering the seasonal off-season, demand has receded, leading to passive inventory accumulation on the supply side, further intensifying the supply-demand contradiction.
Breeding groups are exchanging price for volume, accelerating the release of live pigs, but in the short term, they are still unable to complete inventory clearance, with spot prices continuing to decline. Notably, on April 3, Huachun Network issued a storage notice, trading 10,000 tons, settled at a slaughter weight of 125 kg, corresponding to about 80,000 live pigs. In this regard, Hou Xiaorui stated that this storage action is unlikely to have a substantial impact on the market, but against the backdrop of continuously falling pig prices, the storage news may, to some extent, boost the confidence of farmers and prevent emotional declines in pig prices.
From a recent fundamental perspective, there has not yet been a substantial reduction in production capacity on the industrial side, and although policies emphasize capacity reduction and storage, significant effects are still difficult to see in the short term. Chen Rentao noted that due to the above factors, live pig futures have continued to decline since the first quarter, with the LH2605 contract price dipping to 9,115 yuan/ton on April 9. He also pointed out that the current positions in near-month live pig contracts remain high, with no significant reduction in positions.
It is reported that recently, live pig futures and spot prices have fallen in sync, with the core reason being that the supply base of live pigs remains relatively large (high sow inventory and good reproductive efficiency), coupled with the accelerated daily weight gain of live pigs after the holiday, and the price difference for fattening pigs continuously narrowing, while downstream demand is weak, and the enthusiasm for frozen products and secondary fattening is not high. Hou Xiaorui stated that under the background of increased supply and weak demand, pig prices are performing weakly
&#34;Although the industry is currently in deep losses, the situation of selling at any cost remains rare. The overall industry is in a passive inventory accumulation state, with the weight of market hogs remaining high. In the short term, the fundamentals still face a situation of high weight and a relatively high number of breeding sows, with no obvious positive factors emerging temporarily. Unlike the retail investors' characteristic of bottom-fishing, the short positions in futures are more concentrated, with higher industry participation. Under the monthly contango structure of contracts, the shorts have already gained considerable profits from rolling over positions, with both capital and fundamentals being advantageous. Before the industry capacity is significantly reduced, the shorts may still dominate the market,&#34; said Hou Xiaorui.
At the same time, Chen Jie, an analyst at Galaxy Futures, stated in an interview with the &#34;Huaxia Times&#34; that the short-term market for hogs has limited positive factors, with only large-scale farming enterprises seeing a slight decrease in the weight of market hogs, and the pressure to sell has eased slightly compared to earlier. However, this change has limited impact on the overall market, mainly due to the still significant inventory pressure in the industry, with retail investors and secondary fattening groups maintaining a relatively high number of hogs, and the weight of market hogs also remaining high. Therefore, the core of the weak operation of hog futures still lies in the large supply pressure.
Deep losses also make it difficult to reduce capacity
As hog prices continue to decline, industry insiders indicate that the fundamentals have not changed much, and the surplus pattern has not yet changed. As of the end of March, according to sample data from My Agricultural Products Network, the monitored hog inventory was 39.4021 million heads, a month-on-month increase of 1.3%. Chen Rentao stated that there are no significant changes in the short-term spot market for hogs, with most regions still in a downward trend, and only a few regions experiencing brief and slight rebounds; from the perspective of the planned slaughter volume and current weight in April, there is currently no driving force for a rebound in the spot market, making it difficult to drive up futures prices, although a technical correction after a decline cannot be ruled out.
In addition, according to monitoring by third-party institutions, the hog slaughter in March exceeded the planned target, and the enthusiasm for slaughter in April remains relatively high, with progress possibly improving slightly. In the week of April 3, the cold storage capacity rates for Yongyi and My Agricultural Products Network samples reached 21.05% and 23.03%, respectively, increasing by 2.45 percentage points and 1.151 percentage points week-on-week. In this regard, Chen Rentao stated that there is an oversupply of hogs, slaughter losses, and frozen product inventories have accumulated to near six-year highs for the same period. Considering cash flow constraints, the enthusiasm for purchasing hogs is not high, and price pressure is evident.
At the same time, Chen Jie indicated that in the short term, the pace of hog slaughter is likely to accelerate. According to the slaughter plans released by third-party institutions, it is expected that the slaughter volume of large-scale enterprises in April will still increase month-on-month. From the perspective of ordinary farmers, their inventory is relatively high, coupled with the weight of market hogs remaining high. Therefore, there is still a possibility of an increase in subsequent slaughter volumes, and it is expected that the slaughter of hogs will continue to increase month-on-month.
From the perspective of hog fundamentals, the supply and demand pressure in the market remains quite evident. Hou Xiaorui stated that the industry is currently in deep losses, but the substantial effects of capacity reduction have not yet emerged, such as a significant decrease in slaughter weight and a large number of culled breeding sows; capacity reduction will still require time. Affected by the relatively high inventory of breeding sows and high reproductive efficiency in the previous period, the hog inventory remains in an inertia growth range, and the supply of hogs will still be in surplus throughout 2026; if subsequent capacity reduction does not meet expectations, hog prices may come under pressure again
&#34;In April, some farms have already taken action, and currently, retail investors are gradually starting to sell off their livestock due to losses. Whether the weight reduction plan can be successfully completed (the weight reduction plan in the hog industry refers to the proactive measures taken by breeding enterprises to reduce the weight of hogs sold in the context of current overcapacity and low pork prices) and whether retail investors can accelerate the selling of hogs still requires time to observe,&#34; said Hou Xiaorui.
However, overall, Hou Xiaorui stated that the increase in the selling speed at the breeding end is just a matter of time. After this round of pork prices dropped to a low level, the enthusiasm for secondary fattening and frozen products entering the market was not as expected. Without seeing a significant increase in future pork prices, frozen products generally will not enter the market in large quantities recklessly. The enthusiasm of slaughterhouses to purchase hogs is relatively weak, mainly due to lackluster downstream demand and low willingness to bottom fish.
When will it bottom out?
As pork prices continue to fluctuate, the influencing factors have also attracted external attention. In this regard, Hou Xiaorui stated that the industry has currently entered a critical period of deep losses, and whether the industry's capacity can be effectively reduced is a core indicator. First, there needs to be substantial reduction in the number of breeding sows. As a core leading indicator for judging capacity and price trends, the number of breeding sows must show a sustained and significant decline. The current goal set by the state is to reduce the number of breeding sows to around 36.5 million, and a filing management system is being implemented for leading enterprises. Whether policies and the market can work together to promote capacity clearance is crucial.
&#34;Second, there needs to be an effective decrease in selling weight. While increasing selling weight within a reasonable range can dilute costs, consistently high weights will exacerbate short-term overcapacity. The breeding end needs to actively reduce weight to alleviate the pressure of live inventory. Third, the transmission effect of feed costs and cash flow pressure. Continuous increases in feed prices will accelerate the passive exit of high-cost breeding entities. Only when the depth and duration of losses reach a critical point can the industry truly welcome a trend reversal,&#34; said Hou Xiaorui.
Regarding the future trend of hog futures, Chen Rentao stated that the hog selling volume in the fourth quarter corresponds to the piglet birth volume from April to June. Based on previous breeding conditions, the supply volume in the fourth quarter is expected to remain relatively high. If the industry's inventory reduction is good by then, there will be room for a rebound in fourth-quarter hog futures; otherwise, it will continue to push for capacity reduction through premium pricing, and it is recommended that listed companies conduct hedging at high prices above the full cost.
At the same time, Hou Xiaorui also mentioned that from the perspective of annual supply and demand, the overall supply in 2026 is expected to be in a slightly oversupplied pattern. If there is a phased capacity clearance (weight reduced to a temporary low), there is a possibility of a significant rebound in pork prices. However, in the future, there still needs to be a substantial increase in the elimination of sows; otherwise, after a phased rebound, pork prices will still face downward pressure. For hog breeding enterprises, maintaining hedging above the cost line in 2026 is the optimal choice, as it can help enterprises lock in certain profits at the bottom of the cycle, thereby enduring this round of loss cycle.
&#34;From the perspective of long-term hog futures contracts, their trend still has certain support, mainly because the decline in the contracts themselves has been relatively large. At the same time, from the inventory reduction situation, the pressure may improve in the future. However, the pressure on near-term hog contracts remains quite evident, especially under the circumstances of overall pressure on spot prices and premiums in the futures market, near-term contract prices may still primarily trend downward,&#34; said Chen Jiezheng

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Recently, the price of live pigs has continued to decline due to oversupply and weak demand in the off-season, with live pig futures prices hitting an 8-year low. On April 9, the live pig futures contract 2605 opened at 9,220 yuan/ton, fell to a daily low of 9,115 yuan/ton, and closed at 9,195 yuan/ton, a decrease of 0.97%. Analysts pointed out that the supply-demand contradiction has intensified, and farmers are accelerating the sale of pigs, but it is difficult to clear inventory in the short term. Policy storage measures have limited impact on the market, and live pig futures remain weak

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