China Hog and Raw Milk Prices Rise in July on Tighter Supply

China's hog and raw milk prices showed notable signs of recovery in July, driven by tightening domestic supply and seasonal factors, according to a report from Macquarie. The data suggests that a prolonged period of low prices may be easing for producers in the world's largest pork-consuming nation.

Hog Market Rebalancing

Chinese hog prices experienced a significant rebound, climbing 14% month-over-month to Rmb11.5 per kilogram as of July 23, the report stated. This price increase helped narrow breeding losses to an estimated Rmb300 per head, a marked improvement from the Rmb500 per head loss recorded in late June.

The recovery is attributed to ongoing capacity reductions that began in September 2025 and seasonal support from lower piglet survival rates earlier in the year. China's sow inventory, a key indicator of future supply, has been contracting:

• The inventory stood at 37.8 million head by the end of the second quarter of 2026.
• This represents a 6.5% year-over-year decline and a 3.2% quarter-over-quarter drop.
• The herd size is now approaching the government's target of 37.5 million head by the end of September.

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Looking ahead, Macquarie analysts expect a more meaningful uptick in hog prices starting in the fourth quarter of 2026, spurred by peak-season and festival demand.

Dairy and Poultry Sectors Show Mixed Signals

In the dairy sector, raw milk prices edged up 1% month-over-month to Rmb3.06 per kilogram by the end of July, a 0.3% increase year-over-year. The price of domestic raw milk traded at a 15% discount to imported whole milk powder, narrowing from an 18% discount in June, even as import prices for milk powder declined. Citing management at dairy giant Yili, the report noted expectations for a supply-demand balance in the second half of 2026 as cattle inventories decrease and demand gradually recovers.

Other protein markets showed varied trends. While white-feather broiler prices dipped slightly in July, chick prices surged 17% month-over-month to Rmb2.8 per head. In contrast, the U.S. market faces different pressures. The USDA forecasts U.S. pork production to grow through the end of 2026, projecting hog prices to decline by 10% and 11% year-over-year in the third and fourth quarters, respectively.