Pork Cheaper Than Poultry--A Game of "Chicken" for Hog Producers

China's hog price has dipped below its chicken price--an unusual phenomenon that indicates the seriousness of China's pork glut in 2026. The industry is producing more pigs than the market can absorb, and in doing so it is consuming vast amounts of feed grain and soybean meal. China's poultry industry is expanding rapidly, but the extra poultry supplies are substituting for imports and pouring into the export market. 

Over the past 2 decades Chinese pork prices rose and fell in a familiar cyclical pattern. During downturns, pork prices approached chicken prices briefly every 3 years or so before turning back upward. Since 2021, though, gyrations in pork prices have become more pronounced and parity between pork and chicken prices has become more frequent. The latest 2-year slide in pork prices has resulted in the pork price being less than the chicken price for four months and counting in 2026. The price of live hogs was stuck at about RMB 10 per kg from April to June--close to parity with the price of eggs.

Wholesale prices from China Ministry of Agriculture & Rural Affairs.

When African swine fever ripped through the industry in 2019 and drove pork prices to record highs, Chinese government officials encouraged big hog producing companies such as Muyuan, Wens, New Hope, Zhengbang, and DBN to expand at breakneck pace to renew pork supplies asap. Officials expected big companies to be better at controlling disease, and officials quietly hoped the big companies would crowd out bothersome "backyard" farmers whom they had blamed for hog cycles--"blindly" expanding when prices were good and killing off sows when prices went down.

The big companies were overzealous in their expansion which coincided with covid lockdowns and stalling economic growth. Even greater gyrations in prices resulted, and the hog industry turned into a game of "chicken" (no pun intended) where each company raced to grab market share, driving down prices and hoping smaller and weaker competitors would drop out. No company wants to be the guy who cuts production, allowing competitors grab more market share. 

Since 2025, Government officials have been badgering the hog company executives to cut back on production capacity and relieve downward pressure on prices and profits. But the industry produced a record 59.38 million metric tons of pork in 2025. The decline in prices accelerated in 2026. 

Newly released data this week seems to indicate that China's hog industry finally shows signs of down-sizing. The number of sows is down 6.5% from a year ago, at 37.8 million head, still slightly ahead of the government's target. Their target may be too high because sows are producing more finished hogs than in past years. 

The new data also show that the industry is still turning out more hogs than the market can absorb--the main reason why pork prices have plummeted. China's pork output during the seasonal peak first quarter 2026 was up 4.2% from a year earlier. Pork output in Q2 was still 2.3% higher than a year earlier. The number of hogs slaughtered was up 2.8% in Q1 and 0.4% in Q2. The Q1 pork output and hog slaughter were record-highs for the quarter, and the Q2 quantities were the second largest ever posted. 

Percent changes from a year earlier.
Calculated from China National Bureau of Statistics data.

The growth in pork output was magnified by the industry's inclination to produce heavier hogs--a phenomenon that reflects farms holding on to hogs hoping for a recovery in prices, and the emergence of "second-time fattening" since 2021 in which farmers buy mature hogs and fatten them to even larger size. The average carcass weight has clearly been rising since 2024. The Q2 average of 84.2 kg was up 1.8% year-over-year. (The spike in 2024 is probably a data error.)

Calculated from China National Bureau of Statistics data.

Producers are clearly turning out more hogs than the market is willing to accept. The National Bureau of Statistics reported that hog prices in Q2 2026 were down 28.6% from a year earlier. In contrast, producer prices for cattle were up 5.1%, sheep prices were up 8.5%, egg prices were up 16%, and meat poultry prices were up 0.6% from the previous year.

Ministry of Agriculture and Rural Affairs wholesale price data show that the decline in hog prices accelerated after this year's Spring Festival holiday season. On average, hog prices were down 23% from the previous year in Q1 2026 and down 32% in Q2. Prices finally turned up again to reach RMB 11.35 in the second week of July but were still down 25% from a year earlier.

Wholesale Pork prices fell to a lesser degree: down 15.6% in Q1 2026 and down 20% in Q2. The CPI for pork in June 2026 was down 15.9% year over year.

China Ministry of Agriculture and Rural Affairs wholesale prices for livestock and feed.

Such a large decrease in pork price in response to a modest increase in pork output suggests that demand very price-inelastic. If the market was moving along a fixed demand curve, the 2.3% increase in pork supply and the 20% decrease in pork price imply an extremely small price elasticity of -0.11. Price elasticities for meat are typically found to be -0.2 or -0.3 (still very inelastic). 

There are indications that Chinese consumption is slow--confirmed by recent moves by leaders to boost consumption as a measure to stimulate recovery. It has been widely reported that China's GDP growth dropped to an unusually slow 4.3% in Q2--which probably means it was actually much slower. Restaurants are suffering. Income from the food service sector was up only 1.2% in June 2026, and the increase was only 0.1% for above-scale food service establishments. Per capita disposable income was up 4.2% in the first half of 2026--again much slower than in past years and probably exaggerated--while monthly earnings for rural migrants were up only 3%. 

A hog market analysis this week confirms that high summer temperatures are dampening consumer demand or pork. Consequently, slaughterhouses are not eager to purchase, operating at low capacity, and using measures to suppress prices. The industry as a whole is in loss-making mode, with losses of 300 yuan per head for farrow-to-finish. The July rebound of prices to RMB 11-to-11.5 per kg is close to break-even for the companies with the lowest production cost, including Lihua (RMB 11.5 per kg), Muyuan (RMB 11.7), and Tiankang Bio (RMB 11.8), Dabeinong (RMB 12) and Shennong Group (RMB 12.1), and New Hope (RMB 12.22). Most producers have costs of RMB 13 per kg or higher and lose money on every hog sold. 

Another article this week discussed Muyuan Foods' estimate of its losses for the first half of 2026 at RMB 5.7 to 6.7 billion (about $840 to $985 million), a stark reversal of the RMB 10.53 billion profit posted a year earlier. The losses were attributed to persistently low prices for pigs, a deep industry-wide downturn, and excess supplies.

Muyuan claims to have reined in its expansion by reducing its sow inventory to 3.113 million head at the end of June--down 510,000 from its peak herd in early 2025. Muyuan said its sales of 38.5 million hogs in H1 2026 (excluding piglets and breeding animals) was up only 0.58% from the previous year, while its top competitors increased their sales: Wens Foods was up 7.17% and New Hope was up 11.16%. This article said Muyuan's production cost is RMB 11.6 per kg, while its best-performing benchmark farms have a cost of RMB 11 per kg. 

Muyuan claims to have an effective counter-cyclical management strategy of paring pack on expansion of hog farms, achieving cost reductions, cutting debt, and holding cash reserves to get through the downturn. However, Muyuan is aggressively expanding its hog slaughter capacity to increase the share of its hogs that are slaughtered in its own facilities. 

Poultry is the fastest growing meat in China this year. The Statistics Bureau data indicates that poultry meat output in H1 2026 is up 1.2 million metric tons (mmt) from last year compared with a 990,000-metric ton increase in pork output. Poultry meat output accounted for more than half of the growth in meat output during the first half of 2026. Pork output (31.2 mmt) still accounted for over 60% of meat production and was still more than twice as large as poultry output (13.9 mmt). Meanwhile, China's beef sector is not expanding despite a rescue plan announced nearly 2 years ago. Cattle slaughter and beef output are down from a year ago, and China's cattle herd shrank 4.3% from last year. 

The expansion of poultry production does not necessarily translate into a boom in Chinese consumption. An article this week celebrated China's abrupt swing from net-importer of poultry to net-exporter this year. During the first 5 months of 2026, China's poultry exports increased by 325,000 metric tons and its imports declined by 385,000 metric tons. The article claimed that expanded poultry output had provided adequate numbers of frozen chicken feet and wings to meet domestic demand. The decline in chicken imports likely reflects the collapse of food service in China since chicken feet and wings are often served in fast food outlets, as dim sum, and as snacks. The boom in exports could be another indication of weak domestic demand. 

The Muyuan article anticipates that hog prices will be stuck in a range of RMB 11-to-11.50 during coming months. The hog cycle is expected to turn upward between late in the third quarter of 2026 and the fourth quarter. Other commentators have suggested that companies like Muyuan with vast financial resources are waiting out the downturn, hoping it will drive out smaller and medium scale producers who lack the financial resources to survive an extended period of losses.