China Hog Sector: Better-than-expected sow destocking reinforces our constructive hog sector view

Research evidence excerpt

China Hog Sector: Better-than-expected sow destocking reinforces our constructive hog sector view

Global Research

16 July 2026ab

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EquitiesChina Hog Sector

Better-than-expected sow destocking reinforces Hong Kong

our constructive hog sector view Food & Beverage

Nina Jiang

Analyst

nina.jiang@ubs.com

2Q26 sow capacity cut better than expected +852-2971 5681

China's hog sector is entering a more constructive supply cycle. According to NBS data, Christine Peng, CFA

nationwide reproductive sow inventory declined to 37.8mn heads in 2Q26, down 3.2% Analyst

QoQ and 6.5% YoY, representing an acceleration from the contraction pace in 1Q26 christine-y.peng@ubs.com

and exceeding market expectations. Importantly, the current inventory level is now very +852-2971 7571

close to the Ministry of Agriculture and Rural Affairs' normal capacity target of 37.5mn Steven Dang

heads, suggesting that industry-wide capacity adjustment has made substantial Associate Analyst

progress over the past several quarters. steven.dang@ubs.com

+852-3-712 2195

Sow destock likely to continue

The faster-than-expected reduction in sow inventory reflects continued pressure on

industry profitability. Despite some improvement from trough levels, hog prices (Rmb11/

kg currently) remain below the production costs of most producers (average cost of

Rmb12-13/kg and cash cost of Rmb11.5-12.5/kg, by our estimates), particularly among

smaller and less efficient farms. We believe the current profitability pressure will

continue to drive industry-wide capacity rationalization, with weaker players exiting the

market and producers becoming increasingly disciplined on expansion.We remain

positive on the hog sector. The accelerated decline in reproductive sow inventory