I. China's Nationwide Laying Hen Stock Declines but Absolute Levels Remain Elevated

China's national laying hen inventory began declining starting in September 2025, potentially marking a turning point after production capacity peaked. However, despite the month-on-month decrease in inventory, the decline has been gradual, and the absolute inventory level remains at its highest point for this time of year in recent history. The substantial supply pressure has only slightly eased compared to earlier periods, and the spot market continues to face significant egg supply pressure.

Data indicates that in November 2025, the combined laying hen inventory across 13 key provinces reached 1.307 billion birds, down 0.31% month-on-month from 1.311 billion in October. Compared to the same period last year (1.205 billion), this represents an 8.46% year-on-year increase.

II. Industry Culling Pace May See Fluctuations

Operational losses remain the primary driver of capacity reduction. With per-jin egg profits below the break-even point and marginal profits turning negative, farmers are accelerating the culling of older hens to scale back operations. This has led to a continuous decline in the average age of culled hens nationwide and a sustained increase in culling volumes. Should breeding profits recover in the future, premature culling could result in capacity loss. However, accumulated profits from the previous cycle may help buffer financial pressures and potentially extend the duration of capacity clearance.

III. Pressure from New Capacity May Ease

China's domestic egg prices remained depressed throughout 2025, hovering near five-year lows since February. Low prices worsened farming profitability, with profits remaining in the red or near breakeven for most of the year except January. Data indicates that on December 3, 2025, the comprehensive breeding profit for laying hens stood at RMB-5.61 per bird, a decrease of RMB 64.85 per bird compared to the same period last year. The profit per jin (500g) of eggs was RMB -0.43, down RMB 1.64 per jin year-on-year. Consequently, restocking enthusiasm weakened in 2025, with restocking volumes showing a pattern of initial growth followed by decline, peaking early and dipping later in the year. The prolonged period of negative profits in the second half of the year was primarily associated with lower restocking levels.

Chick sales data indicates weak restocking enthusiasm from August to November 2025. During this period, monthly sales of laying hen chicks nationwide declined both month-on-month and year-on-year, except in November.

New laying hens entering production from December 2025 to March 2026 will primarily originate from chicks restocked between August and November 2025. Consequently, pressure from new production capacity during December 2025 to March 2026 may ease.

IV. Relief in Spot Market Egg Supply Pressure May Take Time

From December 2025 to March 2026, the total number of newly introduced laying hens is projected to be lower than the culling volume of older hens. This decline in the laying hen inventory is expected to ease supply pressure in the spot market. However, the national laying hen inventory will remain elevated in November 2025, exceeding 1.3 billion birds. Disruptions may occur during capacity reduction, and clearing excess capacity will take time, potentially leading to fluctuating egg prices.

V. Conclusion

China's nationwide laying hen inventory remains elevated, maintaining supply pressure. Disruptions may occur during capacity reduction, suggesting a relatively gradual pace of capacity elimination that requires time. The oversupplied dynamics in the spot egg market continue to weigh on futures prices. However, egg demand is expected to follow seasonal patterns, with prospects for recovery in future demand and potential gradual capacity reduction.

As an integrated internet platform providing benchmark prices, On December 5th, the benchmark price of eggs on SunSirs was 6.55 RMB/kg, an increase of 2.02% compared to the beginning of the month (6.42 RMB/kg).

Application of SunSirs Benchmark Pricing：

Traders can price spot and contract transactions based on the pricing principle of agreed markup and pricing formula (Transaction price=SunSirs price + Markup).

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