Event:
According to the monitoring of the national development and Reform Commission, in the week from February 21 to 25, the national average pig grain price was 4.98, which entered the level-1 early warning range of excessive decline determined in the working plan for improving the regulation mechanism of government pork reserves and ensuring supply and stable price in the pork market. The national development and Reform Commission, together with relevant departments, will immediately start the collection and storage of the central frozen pork reserve and guide all localities to actively collect and store. According to the arrangement of relevant national ministries and commissions, the first batch of collection and storage this year is expected to be 40000 tons, which will be carried out on March 3 and March 4, 2022 respectively.
Our analysis and judgment:
1. The pig food ratio has been near the low level of this cycle, and it is expected that the Russian Ukrainian incident may aggravate the tight situation of corn and other feed grains
As of February 25, the specific price of pig grain had fallen to 4.59, which was in the low range, close to the lowest level of 4.11 (October 28, 21) in this cycle. Ukraine is the world’s major exporter of corn and wheat. The Russia Ukraine incident is expected to exacerbate the turmoil in the global food market, affect China’s imports of corn and other products, or exacerbate the tight supply and demand pattern, and the cost of pig breeding is still under pressure.
2. In the short term, purchasing and storage boost confidence, and pig prices may rebound, but the medium and long-term impact is limited
From the perspective of collection and storage over the years, the proportion of collection and storage in the total consumption of the whole year is relatively low. Taking the three rounds of collection and storage from March 8, 2019 as an example, the cumulative collection and storage reached 200000 tons, while China’s pork consumption in that year was 42.55 million tons, accounting for almost negligible proportion; Even in terms of simple average consumption of 3.54 million tons per month, the proportion is small. We believe that the impact of collection and storage on the relationship between supply and demand of pigs is limited, but more emotional.
3. The Russian Ukrainian incident may aggravate the pressure of feed grain price rise, and the trend of pig production capacity removal caused by breeding losses remains unchanged. Continue to firmly recommend pig sector!
In the medium and long term, the trend of de breeding sows in the industry has become, and the bottom of the current pig cycle has been relatively clear. At present, the valuation of pig stocks is still relatively low, and the investment value of pig stocks is prominent! The top of the scale: the focus is on the [ Wens Foodstuff Group Co.Ltd(300498) \\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\\], [ Jiangxi Zhengbang Technology Co.Ltd(002157) ], [COFCO jiajiakang], etc.
Risk warning: policy risk; Epidemic risk Shenzhen Agricultural Products Group Co.Ltd(000061) price fluctuation; Extreme weather; Import changes
