After experiencing deep losses, high debt, and slow turnover, hog farming has entered a period of prosperity reversal.
On one hand, in July, compared to the previous month, hog farming companies have increased their planned hog herds, but in the first ten days of the month, pig breeding in the north was slow due to rainfall. The speed of yield may increase later.
On the other hand, since the end of June, the average weight of pigs for trade has been declining, with weak willingness to continue hog farming. In the future, more suitable pigs may be produced for sale, and considering the second fattening of pigs after the completion of the shelter during hot weather, the pace of pig breeding may accelerate in the middle and second half of July, leading to a weaker pig price.
China International Capital Corporation recently issued a research report indicating that the agricultural sector in the first half of 2024 will exhibit the characteristics of 'recovery of hog farming, technological iteration in seed industry, and continuation of pet food sector's prosperity.' The opportunity in livestock farming mainly comes from supply contraction. After experiencing deep losses, high debt, and slow turnover, hog farming has entered a period of prosperity reversal.
China International Capital Corporation believes that hog farming has entered a new paradigm, with low cost and large volume leading the way to repair the balance sheet, highlighting scarcity.
Guosheng Securities recently issued a research report stating that for the hog farming sector, the right side is open and the elasticity is foreseeable. According to the rhythm of sow births, we expect the peak of this cycle to appear in September to November 2024, when the demand for pig consumption traditionally strengthens. The marginal improvement of demand may reinforce the price performance.
With the marginal improvement of consumption and a reduction in production capacity in the second half of the year, pig prices are expected to rise again, and the pig breeding sector's bullish market may restart.
Domestic hog farming related enterprises:
COFCO Joycome (01610), Dekang Agriculture and Animal Husbandry (02419)
Overseas hog farming enterprises: WH Group (00288)