The contradiction between supply and demand of protein feed has a long history. In recent years, with the continuous growth of protein consumption, the demand for soybean meal, the main raw material of protein feed, has increased significantly. In recent seven years, the increment of soybean crushing consumption has been nearly 23.13 million tons. However, due to China's insufficient soybean production capacity and lack of competitive advantage, China's annual soybean production and demand gap reaches 90 ~ 100 million tons. The huge amount of crushing consumption needs to be supplemented by imports, and the proportion of imports in supply remains above 80%. The risk of foreign Shenzhen Agricultural Products Group Co.Ltd(000061) production will significantly affect the price of Chinese soybeans.
The risk of global oil supply is gathering. 1) On the one hand, the La Nina incident led to a serious drought in South America, the main soybean producing area. USDA lowered the estimated soybean production in South America by 8.7 million tons in February; 2) On the other hand, the conflict between Russia and Ukraine, the world's third largest producer of oil sunflower seeds, has escalated. The export share of sunflower seeds and sunflower meal of the two countries accounts for 32.7% and 81.0% respectively. The contradiction between supply and demand of global oils and fats is widening.
Competition and substitution raise China's grain prices. Corn is the main competitive crop of soybean in the Chinese market. About 34% of China's corn is distributed in the three northeastern provinces, and about 45% of China's soybean is distributed in Heilongjiang and Jilin. In recent years, the expansion of feed demand has exhausted China's corn temporary storage inventory, and China's corn production and demand gap suppresses demand by raising prices. 1) On the one hand, the price increase has improved the planting efficiency of corn, thus squeezing out the sowing area of soybeans. In order to ensure the production of soybeans, the expansion of soybeans and oil plants in 2021 has been written into the central "No. 1 document". It is planned to strive to achieve a sowing area of about 160 million mu and an output of about 23 million tons by 2025. Under the assumption of 50% - 100% extrusion, We estimate that corn is expected to decrease by 2.1 ~ 4.57 million tons, and the potential for future supply growth of corn is suppressed. 2) On the other hand, the price rise has stimulated the substitution of raw materials. In the past five years, the consumption of wheat and rice in feed grain has increased by 146.9% and 127.6% respectively. The policy has guided the reduction substitution of corn and soybean meal in feed, and the increase of feed demand may drive the price rise of wheat and other grains with relatively stable supply and demand.
Global grain supply faces many disadvantages. 1) On the one hand, the La Nina event triggered a global low temperature. The abnormally low temperature in the north in February led to the return of winter wheat to green in the Middle East of the Huang Huai River, which was significantly later than the average in recent five years, which made the wheat that had been delayed in sowing face the risk of yield reduction due to low temperature in the growth period; 2) On the other hand, Russia and Ukraine in the Black Sea region account for 28.5% of the world's wheat exports and 18.7% of the world's corn exports. In recent years, Ukraine was once a major importer of Chinese corn. The war made it possible for Russia Ukraine grain trade to be affected or even blocked, which exacerbated the uncertainty of global grain trade.
Investment proposal and target
The rise of bulk Shenzhen Agricultural Products Group Co.Ltd(000061) prices will have a significant impact on the whole agricultural industry chain.
Pig breeding: the rise in the price of raw materials has led to a further rise in breeding costs, and the production capacity is expected to be further fermented. Pay attention to the allocation opportunities of pig breeding sector.
Feed: the rise of bulk raw materials tests the purchasing and formulation technical ability of feed enterprises. The inefficient production capacity of feed enterprises is cleared or accelerated, and the concentration is expected to improve. Pay attention to Guangdong Haid Group Co.Limited(002311) , Wellhope Foods Co.Ltd(603609) .
Planting chain: price rise or boost the sales price of leading agricultural reclamation enterprises and seed enterprises, and pay attention to Jiangsu Provincial Agricultural Reclamation And Development Co.Ltd(601952) , Heilongjiang Agriculture Company Limited(600598) , Shandong Denghai Seeds Co.Ltd(002041) ; At the same time, in the context of China's increasing dependence on imports, to improve China's agricultural technology level, the promotion of GM commercialization is still a policy orientation, focusing on Beijing Dabeinong Technology Group Co.Ltd(002385) .
Risk tips
The impact of weather is less than expected, the impact of war and other events is less than expected, and the demand growth is less than expected.
