Hong Kong Stock Concept Tracking | The Pig Industry Releases Positive “Signals”. With Supply Contraction, Pork Prices Are Expected to Rise Month by Month

On July 23, the Ministry of Agriculture and Rural Affairs held a policy briefing focused on improving the quality and resilience of China’s hog sector, according to Zhitong Finance. Officials highlighted elevated production capacity and increasing volatility in supply and prices. In response, new control measures were outlined: cutting sow inventories, scaling down secondary fattening, and capping market hog weights. With an anticipated supply contraction expected by Q3 2025, Sinolink Securities projected a month-over-month rise in hog prices.

The ministry also emphasized progress made in recent years, citing improvements in breeding stock quality, biosecurity enforcement, and overall efficiency. Counter-cyclical responses introduced in late 2024 helped steer producers toward gradual capacity reduction, with visible impact. Officials urged further optimization of regulatory tools to avoid future disruptions. The futures market reflected growing sentiment, with the September 2025 hog contract reaching RMB 15,150 per ton—its highest level this year.

To curb internal competition, the National Development and Reform Commission recently met with 30 major hog producers. The outcome: a directive to freeze sow inventory growth, limit hog weights to 120 kg, and discourage secondary fattened sales. China Merchants Securities remarked that these measures may ease competition and CPI volatility, potentially raising price floors through 2026 and supporting profit margins for cost-efficient producers.

Combined sales data from 12 listed hog companies showed that, as of July 10, 2025, June deliveries totaled 16.1481 million pigs—up 45.98% year-on-year. Despite volume gains, profit margins shrank. Sow inventories edged up: 0.12% year-on-year and 0.02% month-on-month. Falling hog prices pushed the average per-head profit for self-breeding farms to RMB 25.15, down 62.35% from May. According to the National Bureau of Statistics, China’s breeding sow count reached 40.43 million in June 2025.

Piglet prices also shifted. As of July 17, 2025, large-scale farms priced 15kg piglets at RMB 542—down RMB 103 from the previous year but RMB 91 higher than the same date in 2023.
June to mid-July saw two selling waves. First, in early June, large producers trimmed hog weights and sold early. Then, in July, smaller farmers offloaded heavier pigs and attempted to buy lighter ones at lower prices for summer operations.

Open Source Securities observed that July marks the core of the supply contraction cycle. Overselling by small farmers could backfire, limiting access to low-cost pigs later and supporting higher pork prices.

Sinolink Securities added that leading producers with low unit costs are earning over RMB 200 per head under current conditions. Their first-half earnings are expected to be strong. However, if delays in supply adjustment persist, pricing pressure may mount later in the year. With careful capacity control, mid-term profitability could still improve.

DEKON AGR (02419.HK): In June 2025, sold 820,230 pigs including 792,530 commercial hogs. Revenue reached RMB 1.565 billion. Average commercial hog price: RMB 14.31/kg, down 2.25% from May. First-half totals: 5.1174 million pigs sold, RMB 10.023 billion revenue—up 34.55% year-on-year.

COFCO JOYCOME (01610.HK): Marketed 427,000 pigs in June. Total YTD sales: 2.898 million pigs. Sold 24,500 tons of fresh pork—33.56% branded. Average commercial hog price: RMB 14.08/kg.
WH GROUP (00288.HK): CICC expects core net profit attributable to shareholders to hit $16.14 billion in 2025 and $16.83 billion in 2026. Current forward P/E ratios: 8.1x (2025) and 7.8x (2026). Target price: HKD 8.56, with implied P/E of 8.7x (2025) and 8.4x (2026). Upside: ~7.8%. Rating: “Outperform.” CICC anticipates Q2 2024 operating profit to rise by low double digits year-on-year, excluding U.S. subsidies.