Pork Prices Plunge: Processing Profits Hit 5-Year High While Farmers Face Heavy Losses

An oversupply of live pigs and insufficient terminal demand have led to depressed pork prices, creating a striking contrast within the industry this year — upstream farmers are increasingly strained, while downstream slaughterhouses are enjoying a surge in profitability.

On the farming side, after a brief stabilization in early November, pig prices once again showed signs of weakness. According to data from Zhuochuang Information, as of November 24, the national average price for live pigs (external three-way crossbreed) fell to 11.52 RMB per kilogram, down 4.71% from the beginning of the month.

The profitability of fattened pigs at the farm level has sharply deteriorated, sliding into widespread losses. The same data indicates that self-bred and self-fattened operations have been in negative earnings since mid-September. As of November 21, these losses averaged 186.61 RMB per head. Piglets sold externally are also generating losses, averaging 50-100 RMB per head.

Ordinarily, the approach of December — the traditional peak consumption season — should provide upward momentum for pig prices. However, mounting supply pressure combined with weak consumer demand is instead undermining price recovery. Zhuochuang Information believes that the December market not only lacks upward force but also carries a clear risk of continued price decline. For breeding enterprises, this oversupply could push the sector into sustained losses potentially extending through 2026, with the depth of losses progressively increasing.

In sharp contrast, the slaughtering industry is entering an exceptionally profitable phase, buoyed by declining pig acquisition costs. Zhuochuang’s data shows that as of November 21, slaughtering profits reached 32.27 RMB per head — the highest level seen in nearly five years.

Typically, slaughtering profits follow a seasonal curve — high at the beginning of the year, softening mid-year, then rising again toward year-end. But an unusual shift occurred this year: by mid-July — typically a low-profit period — margins had already begun recovering, averaging 14.02 RMB per head, surpassing the usual seasonal baseline.

Slaughtering profits are driven by upstream pig prices, downstream pork prices, and slaughtering volume — translating to acquisition cost, sales price, and cost per head. According to Zhuochuang’s industry analyst Zou Jiying, the major drivers of this year’s profit expansion were the low cost of live pig procurement and the large number of pigs being sent to market.

From a longer-term perspective, slaughter volume closely correlates with supply, as more pigs being released to market naturally results in higher slaughtering throughput. Zou notes that this year’s slaughter volume has been elevated, reducing average per-head slaughter costs and expanding margins.

Both pig and pork prices have experienced notable declines this year. According to National Bureau of Statistics data, mid-November pig prices were down 25.64% from early January. Meanwhile, Ministry of Agriculture monitoring shows that wholesale pork prices have fallen by more than 20% over the same period. Lower pig prices mean lower acquisition costs, and this has played a key role in enhancing slaughter profitability.

Supply remains elevated due to a historically large breeding sow population — combined with improved production efficiency in farming — resulting in substantial market output. Excess capacity keeps pig prices suppressed. Additionally, regulatory measures enacted throughout the year — including sow inventory adjustments and restrictions on oversized hog slaughter — have contributed to accelerated pig releases into the market, further reducing cost pressure for slaughterhouses.

From the demand side, lower pork prices have stimulated consumer purchases, supporting higher slaughtering rates. Ministry of Agriculture data shows that in September, designated slaughtering enterprises processed 35.84 million pigs — a year-on-year increase of 28.5%. Zhuochuang monitoring shows that daily slaughtering volume has been on an upward trajectory since July, with November 26 data showing 192,100 pigs slaughtered per day, up slightly from the previous business day.

Higher slaughtering volume translates to lower cost per head and strengthened profitability. Zhuochuang also reports that as of November 20, average slaughterhouse operating rates were 38.99%, up 1.34 percentage points from a week earlier. Zou explains that operating rates serve as a proxy indicator for demand: higher utilization signals stronger terminal consumption and increased orders.

Fresh-cut pork and frozen pork account for two primary sales channels. Zou notes that the fresh-sales ratio is generally comparable to last year. Still, as total throughput rises, overall end-market turnover increases. However, the boost from fresh-cut sales alone remains insufficient to dramatically elevate profitability — meaning structural supply-cost dynamics remain the dominant driver this year.

Despite strong profits this year, the industry’s structural growth remains constrained. Zhuochuang data indicates that in 2024, the top 10 slaughtering companies accounted for only 7.83% of total slaughter volume — reflecting slow progress in industry consolidation due to historically thin margins.

Northern China’s slaughterhouses tend to operate under self-run models with higher utilization rates, while southern markets favor contract-slaughtering models with lower average utilization. Self-run models rely on margin spreads between acquisition and sales prices, making profits more sensitive to market fluctuations, whereas contract-slaughtering businesses primarily earn processing fees with more stable margins.

In 2024, rising pig prices combined with sluggish consumption caused slaughtering orders to contract, pushing the industry into significant losses. Zou notes that slaughterhouses experienced sustained negative profitability from late April through mid-Q3, with average losses of 8.12 RMB per head — pulling the annual average profit down to 11.65 RMB per head, a 59.3% drop year-on-year.

Major industry players have made significant strategic moves across production capacity. WH Group/Shuanghui saw declines in revenue across both slaughtering and processed-meat segments in 2024, with fresh-pork output falling 18.68%. Yet this year, slaughtering revenue has begun recovering. As of its 2025 mid-year report, Shuanghui maintains slaughtering capacity of over 25 million pigs annually, with 9.13 million slaughtered in the first three quarters — up 26.2%.

Meanwhile, Muyuan Foods — the “hog king” — is rapidly expanding downstream into slaughtering, directly challenging Shuanghui’s dominance. Muyuan’s current slaughtering capacity exceeds 29 million heads annually. In the first three quarters of this year, it slaughtered 19.16 million pigs — up 140%, with an impressive 88% capacity utilization rate — and turned a profit in its slaughtering segment in Q3. By late November, Muyuan reported over 22 million pigs already slaughtered for the year, with expectations to double total annual throughput year-on-year.

Looking forward, both Shuanghui and Muyuan are maintaining capacity-expansion strategies, though with differing approaches. Shuanghui prefers an asset-light model, partnering with regional producers rather than building new plants, while Muyuan plans to continue rolling out its already-approved but not-yet-constructed slaughtering facilities.

However, even as competition expands, terminal pork demand remains relatively unchanged from last year. With supply rising and demand struggling to keep pace, pig prices are expected to continue downward.

Data shows that breeding sow inventory grew by 1.07% in February — implying an increase in December market supply once production cycles mature. Additionally, many farmers are expected to dump inventory at year-end to meet annual revenue targets, further pressuring prices.

Analyst Fan Qingqing notes that while some large-scale producers report stable output planning, December’s push to secure annual revenue performance will inevitably drive concentrated hog releases. As a result, December is expected to see “dual growth in supply and demand,” but supply-side growth will likely outpace demand, creating a high probability of price decline.

Zhuochuang forecasts that December’s national average pig price will fall within the 10.8–11.3 RMB per kilogram range — indicating continued downward pressure relative to November.