Analysis of Muyuan Foods' Breeding Sow Reduction and Slaughter Weight Decline: Is the Pig Industry Supply Inflection Point Approaching?

I will now provide you with a systematic and comprehensive analysis report.

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According to the latest data, Muyuan Foods’ breeding sow inventory has undergone significant adjustments:

Time Node	Breeding Sow Inventory (10,000 heads)	Change Range	Remarks
End of 2024	362.1	-	Peak Level
Q1 2025	355.0	-71,000 heads	Initiated Reduction
Q2 2025	343.0	-120,000 heads	Reduced for Two Consecutive Quarters
Q3 2025	330.5	-125,000 heads	Completed 320,000-Head Reduction Target Ahead of Schedule
End of 2025 Target	330.0	-	Policy-Guided Target

As can be seen from the data, Muyuan Foods’ breeding sow inventory has dropped from the peak of 3.621 million heads to 3.305 million heads, with a total reduction of approximately

, close to the 280,000-head scale rumored in the market[1][2].

Muyuan Foods has actively reduced the average slaughter weight, with the changes as follows:

• Average Weight Before Adjustment
  : 128 kg
• Current Average Weight
  : 119 kg
• Policy Target
  : Keep below 120 kg
• Reduction Range
  : Approximately 9 kg per head (7%)
• Expected Completion Time
  : Completed ahead of schedule by the end of August 2025[1]

This adjustment directly affects approximately

, effectively alleviating short-term supply pressure.

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In 2025, the pig breeding industry faced the dilemma of “involution”, with large-scale expansion leading to overcapacity. Against this background, relevant national authorities introduced policies advocating “reduce sows, control secondary fattening, lower slaughter weights”:

• Target Setting
  : Reduce the national breeding sow inventory by approximately 1 million heads to 39.5 million heads
• Enterprise Responsibilities
  : The Ministry of Agriculture and Rural Affairs requires 25 leading enterprises to reduce a total of 1 million breeding sows by the end of January 2026
• Implementation Requirements
  : As an industry leader, Muyuan took the lead in responding to the policy call[2][3]

The prolonged market downturn is the fundamental driving force for capacity reduction:

Indicator	Current Level	Industry Impact
Average Hog Price	Approximately RMB14 per kg	Down 28.1% YoY
Self-Breeding and Self-Fattening Profit	Loss of RMB148 per head	Continuously Deteriorating
Profit from Purchased Piglets	Loss of RMB249 per head	Severe Losses
Piglet Price	RMB200 per head	Sales in Loss

According to the research report from GF Securities, historical experience shows that breeding sow reduction will accelerate significantly 1-2 months after both piglets and fattened hogs fall into losses. The current industry has met this condition[3][4].

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Time Node	National Breeding Sow Inventory (10,000 heads)	vs. Normal Inventory	Change
End of June 2025	4043	+3.7%	Still at a High Level
End of September 2025	4035	+3.5%	Initiated Reduction
End of October 2025	3990	+2.3%	Fell Back Below 40 Million Heads
End of 2025 Target	3950	Approaching Balance	Policy-Guided Target

By the end of October 2025, the national breeding sow inventory had dropped to 39.9 million heads, falling back below 40 million heads after 17 months, with a month-on-month decrease of 1.1%, and the reduction slope is gradually steepening[2][3].

The current industry has triggered multiple supply inflection point signals:

Signal Indicator	Status	Interpretation
Breeding Sow Inventory < 39 Million Heads	✅ Met	Approaching the Balance Line
Slaughter Weight < 120 kg	✅ Met	Policy Target Achieved
Industry Severe Losses	✅ Met	Drives Spontaneous Market Exit
Strong Policy Guidance	✅ Met	Joint Regulation by Multiple Departments
Secondary Fattening Contraction	✅ Met	Reduces Artificial Disturbance

Based on the 10-month transmission cycle from breeding sows to market hogs:

Q1-Q2 2025 → Accelerated Capacity Reduction
     ↓
Q4 2025 → Reduction Transmits to Piglet Supply
     ↓
Q2-Q3 2026 → Hog Supply Begins to Contract
     ↓
End of 2026 → Initial Impact of Supply Contraction Visible
     ↓
2027 → Trend-Based Upward Inflection Point May Emerge

According to the analysis from Shenwan Hongyuan Securities, this hog cycle entered a downward phase in September 2024 and has been declining for 14 months so far, while the average downward duration of the past six cycles was approximately 22 months. From the perspective of cycle timing, the downward phase is approaching its end[3][4].

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Time Period	Price Range (RMB/kg)	Core Logic
Jan-Mar 2026	10.5-11.5	Supply pressure dominates; demand falls after Spring Festival
Apr-Jun 2026	11.0-12.0	Traditional off-season; continues to fluctuate and explore the bottom
Jul-Aug 2026	12.0-12.5	Annual high; supported by holiday stockpiling
Sep-Dec 2026	12.5-14.0	Key observation period; inflection point brewing

• Cost Support
  : The cost of leading enterprises has dropped to RMB11.3 per kg, and Muyuan’s cost is approximately RMB11.8 per kg
• Supply Pressure
  : The national hog inventory reached 437 million heads by the end of Q3 2025, up 2.3% YoY
• Balance Range
  : It is expected that hog prices will fluctuate at low levels of RMB10-13 per kg throughout the year[3]

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Enterprise Type	Total Cost (RMB/kg)	Profit Status
Muyuan Foods	11.8	Still Has Profit Margin
Leading Enterprises	11.3-12.0	Meager Profit Status
Small and Medium-Sized Farmers	>14.0	Severe Losses

With its entire industrial chain layout and intelligent breeding, Muyuan has controlled its costs to 15% lower than the industry average, and can still maintain profitability even if hog prices fall to RMB13 per kg[1][2].

• Asset-Liability Ratio
  : Dropped to 56.06% by the end of June 2025, down 2.62 percentage points from the beginning of the year
• Monetary Funds
  : Reached RMB30.78 billion, up 45% YoY
• Cash Flow
  : Latest free cash flow of RMB25.16 billion, financial resilience enhanced

Industry concentration continues to improve, with the slaughter volume share of the top 20 breeding enterprises rising from 24.59% in 2023 to 27.63% in 2024. As an industry leader, Muyuan’s market share is expected to increase from the current 18% to 25% in 2026[1][2].

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: Supply pressure will persist, hog prices will continue to fluctuate at low levels, and a substantive inflection point is unlikely.

: If capacity reduction continues, the supply-demand relationship is expected to gradually improve, and a phased inflection point may emerge in mid-2026.

: As the accelerated reduction starting from Q4 2025 transmits to the supply side, a trend-based upward inflection point may emerge in 2027.

1. Focus on Leading Enterprises
   : Muyuan Foods is expected to weather the fluctuations at the cycle bottom relying on its cost advantages and financial resilience
2. Seize Layout Opportunities
   : Currently in the double bottom area of cycle bottom and valuation bottom
3. Track Key Indicators
   : Focus on changes in breeding sow inventory, hog price trends, and cost control capabilities

• Capacity reduction falls short of expectations
• Consumer demand remains weak
• Sudden epidemic on the breeding side
• Policy regulation falls short of expectations

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[1] Guangdong Provincial Association of Animal Husbandry and Veterinary Medicine. Muyuan’s Capacity Regulation “Combination Measures”: From 3.43 Million to 3.3 Million Heads, How to Reshape the Hog Cycle Pattern? https://www.gdaav.org/mobile/article/15283.html

[2] ZhuoChuang Information. Can the Breeding Side Hold On? Accelerated Breeding Sow Reduction, Is the Hog Price Upward Inflection Point Approaching in 2026? https://www.cpcti.com/hangqing/154285.html

[3] National Business Daily. Policies and Markets Promote Accelerated Capacity Reduction, a New Cycle Starting Point for the Pig Industry is Expected in 2026. http://xm.shandong.gov.cn/art/2025/12/26/art_24614_10349824.html

[4] Sina Finance. In-Depth Research Report on 2026 Hog Price Trends. https://www.xincai.com/article/nfzwira5526440

[5] Jinling API Data - Muyuan Foods (002714.SZ) Company Profile and Financial Data

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The chart above shows the change process of Muyuan Foods’ breeding sow inventory from 3.621 million heads to 3.3 million heads, the trend of national breeding sow inventory falling back below 40 million heads, the adjustment of slaughter weight from 128 kg to 119 kg, and the 10-month transmission timeline of the hog cycle.


The chart above comprehensively presents the current supply-demand pattern and cycle position of the pig industry from four dimensions: hog price vs. cost comparison, supply contraction forecast, industry concentration change, and inflection point signal monitoring.