What impact will the plunge in hog prices have on poultry farming industries such as chicken and duck?

When hog prices fell below 10 yuan/kg, hitting a near seven-year low, the substitution effect and cost transmission chain of the entire meat consumption market are quietly being restructured. The poultry farming industry is the first to face a profound adjustment in the supply and demand pattern.

The Current Situation and Causes of the Hog Price Plunge

As of March 2026, the national average hog price fell to 10.29 yuan/kg, a year-on-year decrease of nearly 30%, approaching the historical low of 2018. Farming has fallen into comprehensive losses, with the self-breeding and self-raising model incurring losses of over 280 yuan per head, and the industry's cash flow continues to be under pressure. This situation stems primarily from three contradictions:

1. Severe oversupply: The number of breeding sows reached 39.61 million, exceeding the reasonable upper limit of 39 million set by the Ministry of Agriculture and Rural Affairs. Coupled with improved production efficiency (such as optimized PSY indicators), the actual number of commercial pigs slaughtered surged.

2. Persistently weak demand: Consumption enters the traditional off-season after the Spring Festival. The diversification of meat consumption among younger generations reduces the proportion of pork, and seasonal demand for products like cured meat has not met expectations.

3. Rigidly rising costs: Feed raw material prices have generally increased within six months, with corn and soybean meal rising by 8.23% and 11.31% respectively, further squeezing profit margins.

Chain Impact on the Poultry Farming Industry

▍Substitution Effect: Short-term suppression of poultry consumption

The dramatic drop in pork prices (such as pork ribs falling from over ten yuan per kilogram to 8 yuan) significantly improved its cost-effectiveness, leading consumers to switch to pork as a substitute for poultry. Wholesale market data shows that sales of chilled pork carcasses increased by 20% year-on-year, while poultry sales slowed down, with catering companies preferring to purchase lower-priced pork to reduce costs. This shift in consumption is particularly evident at family dining tables and in group catering channels, suppressing the upward potential of poultry prices in the short term.

▍Cost Transmission: Double Pressure from Feed Costs

Poultry and pig farming share a common feed cost structure (feed accounts for approximately 60%). Rising prices of raw materials such as corn and soybean meal have led to a 12%–15% year-on-year increase in the total cost of poultry farming. However, poultry prices are suppressed by low pork prices and cannot be raised in tandem. Small and medium-sized broiler and duck farms are caught in a "high cost, low selling price" dilemma, with some enterprises forced to sell their chickens early to reduce losses.

▍Capacity Adjustment: Accelerated Industry Reshuffling and Differentiation

Poultry companies are passively reducing production: The willingness to restock poultry chicks has plummeted, and breeding farms are culling inefficient breeding chickens and ducks. For example, some companies in Shandong have reduced their breeding poultry inventory by 15%.

Leading companies are transforming their strategies: Companies like Wens and New Hope, which have diversified into other sectors, are leveraging their financial advantages to allocate resources to poultry disease prevention and breed optimization, maintaining their pricing power through "reduced quantity, improved quality."

Differences in policy regulation: The government has initiated a stockpiling program for live pigs and forcibly reduced the number of breeding sows to 36.5 million, but the poultry industry lacks similar support policies, leading to a faster exit for small and medium-sized farmers.

Medium- to Long-Term Impacts and Industry Restructuring

▶ Market Landscape Reshaping

The low-price cycle for pork is expected to continue until the third quarter of 2026, requiring poultry farming to experience a 6-8 month period of demand squeeze. As the reduction in live pig production capacity deepens (piglet prices fall below 300 yuan/head), poultry consumption may rebound in 2027. However, changes in consumption habits are irreversible, and the poultry industry needs to adapt to a dynamic balance where poultry meat faces pressure during periods of low pork prices and fills the gap during periods of high pork prices.

▶ Accelerated Intensification

The concentration of the poultry industry will significantly increase:

- Technological Barriers: Automated environmentally controlled chicken houses and genetically modified breeding technologies have become core competitive barriers, accelerating the exit of small-scale farmers due to insufficient equipment investment;

- Supply Chain Integration: Slaughter-cold chain integrated enterprises mitigate price fluctuations by securing catering clients, such as some enterprises in Guangdong that have built their own cooked food processing lines to convert excess capacity;

- Differentiated Competition: Sub-categories such as yellow-feathered broilers and organic ducks rely on brand premiums to withstand cyclical shocks, forming market stratification with bulk white-feathered poultry.

Implications and Response Strategies

The collapse in hog prices exposed the fragility of the livestock and poultry industry linkage. For poultry companies, a three-pronged defense mechanism is needed:

1. Dynamic cost control: Utilize futures tools to hedge feed price fluctuations and implement "precision nutrition formulas" to reduce the feed conversion ratio;

2. Demand elasticity development: Expand into high-value-added categories such as prepared meals and snack foods to reduce reliance on live poultry prices;

3. Flexible capacity adjustment: Establish a "core breeding stock + contract farming" model to quickly respond to changes in pork prices and adjust slaughtering schedules.

As the pork-to-grain price ratio falling below 4.67:1, triggering a level-one warning, signals that competition in the meat market is essentially a comprehensive game of efficiency and risk resilience. Only by breaking free from the role of "cycle follower" can the poultry industry take the initiative in the new equilibrium.