Finansia Syrus Securities (FSS) reports that the Chinese government is urging a reduction in the number of breeding sows (female pigs after the first farrowing) in an attempt to stabilize plummeting pork prices, which have slumped roughly 25% year-on-year.
This move is expected to eventually lift prices in the Chinese pork market, which hit a three-year low yesterday at 13.39 yuan per kilogram—below the production cost for most farmers, estimated between 13.5 and 14.5 yuan per kilogram.
So far in the third quarter, the average pork price stands at 14 yuan per kilogram, representing a 4% drop from the previous quarter and a substantial 29% decline year-on-year. The sharp correction has primarily been attributed to soft demand across China while supply remains elevated.
According to FSS, controlling output should help prices stabilize and recover above production costs, which would be a positive development for Charoen Pokphand Foods (SET: CPF). The company derives between 5% and 8% of its net profit from its Chinese pork segment.
However, the broader meat market, including Thailand, Vietnam, and China, has experienced sequential price declines in recent quarters. As a result, FSS expects CPF’s earnings in the second half of 2025 to weaken considerably compared to the first half. Should meat prices rebound, this could provide a much-needed boost to both the company’s share price and overall profitability. Investors are advised to keep an eye on pork prices in both China and Thailand, particularly after the rainy season and the upcoming vegetarian festival.
FSS maintains a target price of 30 baht for CPF and recommends a speculative trading approach.
