Equities • Food Products

Research evidence excerpt

Equities • Food Products

17 July 2026

Equity Research Report

China’s hog industry EquitiesFood Products

How to read the 2Q data? China

◆ Sow inventory down 6.5% y-o-y as of end-June; the hog Yihui Sha* (Reg. No. S1700519100001)

market may have been oversold in 2Q Head of A-share Agriculture Research HSBC Qianhai Securities Limited

yihui.sha@hsbcqh.com.cn

◆ Losses to narrow in 3Q; likely to return to profitability in 4Q +86 21 5066 2004

◆ Maintain Buy ratings on Muyuan, Wens and Haid Group with * Employed by a non-US affiliate of HSBC Securities (USA) Inc, and is

unchanged TPs not registered/ qualified pursuant to FINRA regulations

Sow inventory fell 6.5% y-o-y. According to the National Bureau of Statistics, as of

end-June, the national sow inventory declined to 37.80 million head, down 6.5% y-o-

y and 3.2% q-o-q, reflecting accelerated capacity reduction against the backdrop of

deep losses in the hog sector in 2Q26, consistent with our view (see China’s hog

industry: At the trough, mapping the path to recovery, 25 June 2026). The sow

inventory is now only 300k head above the Ministry of Agriculture and Rural Affairs

(MARA)’s target. We maintain our view that sow inventory will reach this target by

3Q26, with a high probability of completion ahead of schedule, driven by the following

factors: 1) With pig prices rebounding to RMB11/kg in July and losses narrowing to

approximately RMB100/head, we believe non-corporate farms will continue to reduce

sow inventory under loss-making conditions, albeit at a slower pace; 2) corporate

farms are also likely to continue reducing sow inventory, as MARA’s control

measures become increasingly granular — we now expect corporate farms’ sow

inventory to continue declining from end-December 2025 levels (vs our prior view of

stability).