Periodic/Sector reports
Food: China Swine Price Upcycle; Stronger Sector Momentum Expected In 3Q26
MARKET WEIGHT (Maintained)
Analyst
Highlights
- China and domestic swine prices are expected to strengthen in 2H26 hoh and yoy, while commodity prices may soften hoh.
- 2Q26 sector earnings are expected to weaken qoq and yoy. However, we expect an earnings recovery in 2H26.
- We believe CPF is well positioned to outperform as a key beneficiary of the China swine price upcycle in 2H26 hoh.
- Maintain MARKET WEIGHT with CPF and ITC as our top picks.
Analysis
Anatomy of Swine Situation
Source: UOB Kay Hian
- Anatomy of swine situation; relocation of large scale farms. The swine industry has undergone a gradual transition from a fragmented structure dominated by small-scale farms toward a more consolidated market led by commercial producers. This trend was significantly reinforced by the African Swine Fever outbreak, which exposed the vulnerability of smaller operators with inadequate biosecurity measures. Given the losses incurred by many small-scale farmers during 1H26 in Thailand and China, we see a risk of further small farm exits. The resulting supply reduction should support higher swine prices in 2H26.
- Sector earnings anticipated to turn around in 2H26 on higher livestock prices from the China and Thailand markets. While livestock producers are expected to deliver weak earnings in 2Q26, we anticipate an earnings sector recovery in 2H26, both hoh and yoy, by improving swine prices in Thailand and China. In 1H26, the swine industries in Thailand and China faced unfavourable profitability amid oversupply and subdued demand. However, we expect market conditions to improve in 2H26, with the strongest recovery likely in China market, driven by: a) tighter supply following industry-wide production controls implemented since the beginning of 2026, b) further supply rationalisation as loss-making small-scale farms exit the market, and c) seasonal demand strength during the 4Q26. China swine prices are expected to bottom out in 2Q26 and gradually recover throughout 2H26, offering an additional earnings tailwind for CPF. For the Thailand market, the earnings recovery in 2H26 is expected to be driven by higher domestic swine prices hoh. Meanwhile, swine prices in Vietnam are likely to remain stable at healthy levels.
Highlights
- China and domestic swine prices are expected to strengthen in 2H26 hoh and yoy, while commodity prices may soften hoh.
- 2Q26 sector earnings are expected to weaken qoq and yoy. However, we expect an earnings recovery in 2H26.
- We believe CPF is well positioned to outperform as a key beneficiary of the China swine price upcycle in 2H26 hoh.
- Maintain MARKET WEIGHT with CPF and ITC as our top picks.
Analysis
Anatomy of Swine Situation
Source: UOB Kay Hian
- Anatomy of swine situation; relocation of large scale farms. The swine industry has undergone a gradual transition from a fragmented structure dominated by small-scale farms toward a more consolidated market led by commercial producers. This trend was significantly reinforced by the African Swine Fever outbreak, which exposed the vulnerability of smaller operators with inadequate biosecurity measures. Given the losses incurred by many small-scale farmers during 1H26 in Thailand and China, we see a risk of further small farm exits. The resulting supply reduction should support higher swine prices in 2H26.
- Sector earnings anticipated to turn around in 2H26 on higher livestock prices from the China and Thailand markets. While livestock producers are expected to deliver weak earnings in 2Q26, we anticipate an earnings sector recovery in 2H26, both hoh and yoy, by improving swine prices in Thailand and China. In 1H26, the swine industries in Thailand and China faced unfavourable profitability amid oversupply and subdued demand. However, we expect market conditions to improve in 2H26, with the strongest recovery likely in China market, driven by: a) tighter supply following industry-wide production controls implemented since the beginning of 2026, b) further supply rationalisation as loss-making small-scale farms exit the market, and c) seasonal demand strength during the 4Q26. China swine prices are expected to bottom out in 2Q26 and gradually recover throughout 2H26, offering an additional earnings tailwind for CPF. For the Thailand market, the earnings recovery in 2H26 is expected to be driven by higher domestic swine prices hoh. Meanwhile, swine prices in Vietnam are likely to remain stable at healthy levels.
MARKET WEIGHT (Maintained)
Analyst
IMPORTANT NOTICE - DISCLOSURES AND DISCLAIMERS
This report is provided subject to, and must be read together with, the full Disclosures / Disclaimers available at the following link: https://research-api.uobkayhian.com/assets/disclaimer/df64a6ea-7980-447c-ae9e-fd19b93257dc, which are incorporated by reference into this report. In particular, this report is intended for general circulation and informational purposes only and does not constitute personal investment advice or a recommendation to buy or sell any investment product or security. You should independently evaluate the information and, where necessary, seek advice from a qualified financial adviser regarding the suitability of any investment. Analyst certifications required under applicable regulations, including SEC Regulation AC (where relevant), are included in this report. By accessing, receiving or using this report, you acknowledge that you have read, understood and agreed to be bound by the Disclosures / Disclaimers, as may be amended, supplemented or updated from time to time.
