A live pig incurs a loss of nearly 400 yuan. Why did pig-raising stocks experience a significant surge?

Since March, the hog market has grown increasingly cold. The national average price of hogs has kept falling, moving from “breaking 10” to “breaking 9,” step by step.

Entering April, the industry’s downtrend has not stopped. As of the week of April 6, the hog price had fallen below the 9 yuan per kilogram threshold. Losses on average per head for both self-breeding and self-raising operations are nearing 400 yuan, and the entire industry has fallen into deep losses.

However, the capital market’s reaction is sharply at odds with the industry’s chilly conditions. On April 7, the pork sector moved higher with unusual strength. By the midday close, Huatuan Shares (002840.SZ) and Juxing Agriculture & Animal Husbandry (603477.SH) both hit the daily limit in a strong move. Tiankang Bio (002100.SZ), Shennong Group (605296.SH), Longda Foods (002726.SZ), and Delisi (002330.SZ) all followed with gains. Related ETFs saw synchronized volume expansion: the Livestock Breeding ETF from E Fund rose 2.30%, with trading volume of 15.78 million yuan; the Animal Husbandry & Breeding ETF from GF Securities rose 2.35%, with trading volume of 24.03 million yuan. Even more worth noting is that on April 7, the animal vaccine sector also surged: MuDing Shares (600195.SH) hit the daily limit, while Shenlian Bio (688098.SH) recorded a 20CM daily limit.

On one side, hog prices have fallen to an all-time low, and the entire industry is deeply loss-making; on the other, pork stocks and animal drug stocks have risen together.

The awkward balance sheets of hog-raising companies

To understand the current capital market’s contrarian positioning, it is impossible not to mention the 2025 performance report that hog-raising companies have just turned in. According to calculations, in 2025 the average profit per head of hogs marketed by the industry was only 31 yuan, down 183 yuan from 2024.

Taking the industry leader Muyuan Co., Ltd. (002714.SZ) as an example, in 2025 Muyuan recorded operating revenue of 144.145 billion yuan, up 4.49% year over year. Net profit was 15.812 billion yuan, down 16.45% year over year. In terms of marketed volume, the company marketed 77.981 million head of commercial hogs in 2025, up 8.91% year over year, and its market share further increased 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 profits.

Tiankang Bio’s situation is also not optimistic. Based on an earlier earnings forecast, the company expects 2025 attributable net profit to be between 205 million yuan and 305 million yuan, a decline of 66.12% to 49.59% from the same period last year. Although its full-year marketed hog volume reached 3.19 million head, up 5.34% year over year, a sharp drop in hog sales prices led to a major year-over-year decline in profits from the breeding business.

Yihua Co., Ltd. (300761.SZ) is even more representative. In 2025 the company’s marketed hog volume reached 21.1 million head, up 63% year over year, one of the fastest-growing firms in the industry. Although Yihua stated in its announcement that the hog market conditions in 2025 were better in the first half than in the second half, and that its main business segments achieved profit complementarity between the two halves, which partially offset the impact of the industry cycle downtrend, in its earnings forecast the company expected full-year net profit of between 550 million yuan and 600 million yuan, a year-over-year decline of more than 60%.

A series of data is revealing a fact: In 2025, for the hog-raising industry, scale expansion is no longer a guarantee of profits. Entering 2026, as hog prices continue to fall, losses of nearly 400 yuan per hog head across the whole industry are steadily consuming corporate cash flow.

Is the industry coming into a bottoming rebound?

On the capital market front, from the policy side, on March 4, 2026, the first batch of central government reserved frozen pork began, with a size of 10,000 tons. On April 3, the second batch of reserves was implemented again, also at 10,000 tons. Although the absolute reserves quantity accounts for only about 0.16% of the national hog inventory, the core significance of the reserves is to release the policy “backstop” intent to the market, with the aim of curbing panic selling and stabilizing expectations on the breeding side.

More substantive than the reserve signals is the ongoing tightening of capacity-control targets. In 2025, the target for the normal stock of breeding sows was reduced from 40.38 million head to 39.50 million head. Entering 2026, that target was further lowered to 36.50 million head, a reduction of 3.0 million head. Regulatory authorities require annual production filing management for leading hog enterprises, unify the data reporting and statistical methodology, and ensure that reported data is true, verifiable, and traceable.

Judging from institutional moves, in the investor relations management information announcement released by Tiankang Bio at the end of March, it stated that between March 20, 2026 and March 25, 2026 it received 59 institutions, including CITIC Securities (600030.SZ), for concentrated research and visits. HuaAn Securities (600909.SZ)’s recent research report believes that the valuation of the hog sector is at a historic low, offering allocational value. Shanxi Securities (002500.SZ) believes that while the hog industry may face pressure in the first half, it is also a time window with relatively good conditions for capacity reduction. Because the industry’s tasks of reducing liabilities and repairing balance sheets have not yet been completed, if industry prices remain low for an extended period, it may further facilitate market-based capacity elimination. In 2026, there may be the third instance since 2021 of capacity reduction with a fairly noticeable magnitude, and the fundamentals and valuations of the hog-raising industry are expected to be repaired.

From the logic of transmission along the industrial chain, the surge in the animal drug sector on April 7 was superficially driven by increased sentiment toward animal vaccines triggered by the H5N1 avian influenza outbreak. But a deeper logic is that leading companies such as MuDing Shares are not only designated producers of avian influenza vaccines; they are also core suppliers of major animal disease vaccines such as foot-and-mouth disease and high-pathogenic avian influenza. With the reserves policy backstopping hog prices and the acceleration of capacity reduction, it means that the industry’s business cycle conditions are expected to improve in the future. Once breeder profits improve, their willingness and capability to purchase upstream products such as animal vaccines and animal drugs will correspondingly strengthen.