Considering that the excess capacity has been resolved for more than a year and the capital situation at the breeding end has not yet recovered with the upcoming rainy season adding pressure on preventing and controlling the southern pig disease, the current market situation is still in its early stages of development with sufficient continuity. As for the individual stocks, the focus should be on the degree of realization, including the realization of the number of marketable pigs and the improvement of breeding performance, and the key is to grasp the target below the median valuation of the historical central tendency.
Zhixin Finance APP learned that Guolian Securities released a research report indicating that at the beginning of June, the sentiment of northern small investors to sell was relatively strong, and the slaughter volume increased with the boost of Dragon Boat Festival consumption. The pig price quickly rose to 19 yuan/kg, but declined after the festival due to the decrease in demand and the forthcoming second childbirth's expectation of the marketing period. The market prices then dropped. Considering that the excess production capacity has been resolved for more than a year and the capital situation at the breeding end has not yet recovered with the upcoming rainy season adding pressure on preventing and controlling the southern pig disease, the current market situation is still in its early stages of development with sufficient continuity.
Guolian Securities' main points are as follows:
According to the National Bureau of Statistics/Ministry of Agriculture and Rural Affairs, the number of sows in stock for pig farming had a month-on-month increase for the first time in May.
According to data from the National Bureau of Statistics/Ministry of Agriculture and Rural Affairs, the total number of sows in stock for pig farming was 39.96 million heads at the end of May, a year-on-year decrease of 6.2%, a decrease of 3.94 million heads from the seasonal peak at the end of December 2022. With the decrease in sow inventory, the number of new piglets born in China's pig farms has been dropping from the high level since October last year. Correspondingly, the number of pigs put up for sale in recent times has decreased, which has reduced the pressure of market oversupply to some extent. From the perspective of pig production, the number of newborn piglets in China from December last year to May of this year decreased by 7% year-on-year, indicating that the number of pig put up for sale in the second half of the year is expected to decrease year-on-year.
According to YONGYI Consulting, the month-on-month increase in the number of sows in stock narrowed in May.
Samples from YONGYI Consulting showed that the month-on-month increase in the number of sows in stock at Sampled Point 1 in May 2024 was +0.73% (previous value +0.96%), and that at Sampled Point 2 was +0.32% (previous value +0.45%). At present, large and medium-sized pig companies tend to be stable and cautious, and some are slightly affected by capital or diseases, resulting in a slight reduction in production. The increase in the number of sows in stock in the northern region is greater than that in the southern region, with an increase of over 1% in the northeastern region. The capacity increase mainly comes from small investors, while the increase in the southern region is relatively small due to sufficient capacity.
According to Mysteel, the month-on-month increase in the total number of sows in stock was reduced to 0.43% in May 2024 (previous value +0.94%), including an increase of 0.38% in the total number of sows in stock for large-scale farms (previous value +0.87%), and an increase of 1.96% in the total number of sows in stock for small-scale and individual farms (previous value +3.22%). Mysteel feedback showed that the pig disease was relatively stable, coupled with the expansion of the profit space for pig and piglet breeding, the industry had a weak willingness to resolve excess capacity on its own initiative, and the speed of capacity optimization and replacement had accelerated. Pregnant sows added before rushed to mate, with pig breeding capacity to be realized gradually. In the long run, the industry holds a cautious attitude towards the market next year. Combined with the fact that some enterprises still face significant pressure due to capital and cost, the overall capacity expansion movement is slow.
According to Mysteel data, the month-on-month increase in the total number of sows in stock for samples was +0.43% in May 2024 (previous value +0.94%), including a month-on-month increase of 0.38% in the total number of sows in stock for large-scale farms (previous value +0.87%) and a month-on-month increase of 1.96% in the total number of sows in stock for small-scale and individual farms (previous value +3.22%). Mysteel feedback showed that the pig disease was relatively stable, coupled with the expansion of the profit space for pig and piglet breeding, the industry had a weak willingness to resolve excess capacity on its own initiative, and the speed of capacity optimization and replacement had accelerated. Pregnant sows added before rushed to mate, with pig breeding capacity to be realized gradually. In the long run, the industry holds a cautious attitude towards the market next year. Combined with the fact that some enterprises still face significant pressure due to capital and cost, the overall capacity expansion movement is slow.
In June, pig prices rose sharply and then fell back. The proportion of small-weight pigs was slightly increased.
At the beginning of June, the sentiment of northern small investors to sell was relatively strong, and the slaughter volume increased with the boost of Dragon Boat Festival consumption. The pig price quickly rose to 19 yuan/kg, but declined after the festival due to the decrease in demand and the forthcoming second childbirth's expectation of the marketing period. The market prices then dropped. As of June 22nd, the proportion of small-weight pigs below 90 kg put up for sale was 3.89%, an increase of 0.26% from last week. Due to the impact of heavy rainfall in some southern provinces, small-weight pigs began to be put up for sale, and the increase in small-weight pigs in Yunnan-Guizhou-Sichuan was slight. Watch out for the risk of the impact of the epidemic as the rainy season in the south intensifies.
Related symbols: recommended Muyuan Foods (002714.SZ), Wens Foodstuff Group (300498.SZ), Leshan Giantstar Farming&Husbandry Corporation (603477.SH), Shennong Group (605296.SH), Tangrenshen Group (002567.SZ), Hunan New Wellful (600975.SH), Tecon Biology Co.Ltd (002100.SZ), etc. At the same time, it is recommended to focus on the post-cyclical animal health and feed sectors, such as Guangdong Haid Group (002311.SZ), etc.
Risk Warning: The risk of the outbreak of diseases, long-term low pig prices, and the risk of fluctuation in raw material prices.