We believe that the current time point has reached the investment stage brought by the expected reversal of pig breeding sector!
1. Short term pig price long and short game. It is expected that the rise of pig price will stop before the Spring Festival:
Consumption boost: strong demand is one of the factors that may not lead to a sharp decline in pig prices in the short term. Winter is the traditional production period of bacon and sausage, so the demand for pork will be higher than that in other seasons, which may drive the upward price of pigs.
Increase in supply: 1) in terms of the amount of slaughter, due to the early time of the Chinese New Year in 2022, there may be trampling before the festival. As farms and farmers are generally pessimistic about the price of pigs after the year, according to the understanding from Tianfeng agriculture and third-party institutions, there may be stampede out before the year. Moreover, some farms / households are unwilling to hold pigs for the new year, so it may also lead to the possibility of centralized marketing before the year. 2) In the early stage, the pig price rebounded, the weight of the pressed pigs increased, and the pressed farmers anchored the slaughter before the festival. It is expected that there are relatively many reborn pigs in general; 3) Although the frozen meat inventory rate and the high point have been greatly improved, it is still high at present. Moreover, considering that frozen meat stockers may have a strong demand for delivery at the end of the year, it may also lead to downward pressure on pig prices.
2. In the medium and long term, the bottom of pig price is now, and it is expected to reverse in the middle of this year.
The loss of the pig industry as a whole has led to the obvious de industrialization of production capacity, and the de industrialization trend has been determined. This view is confirmed by official data, tripartite data and grass-roots research data of Tianfeng agriculture. 1) According to the data of the Ministry of agriculture and rural areas, as of November 2021, the number of fertile sows in China's fixed-point monitoring continued to decline by 1.2% month on month. In December, the production capacity of fertile sows was still being decontaminated. Compared with the high point of fertile sows in May, it continued to decline for six months, with a cumulative decline of more than 7%. Moreover, in terms of the de commercialization range in November, even when the pig price rose so high from mid to late October to November, the de commercialization range can still reach 1.2%, which reflects that the de commercialization trend in the industry has been determined. According to the research data of Yongyi, Zhuo Chuang and Tianfeng agricultural grassroots, the capacity of the industry has been reduced by more than 10%.
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Risk tips: 1. Risk of national policy change; 2. Breeding disease risk; 3. Price fluctuation risk; 4. Market systemic risk
