In the first two trading days of 2022, the pig breeding sector ushered in a "good start". As of the closing on January 5, Fujian Aonong Biological Technology Group Incorporation Limited(603363) closed up more than 8% and once hit the daily limit; New Hope Liuhe Co.Ltd(000876) rose more than 5% for two consecutive trading days, followed by Wellhope Foods Co.Ltd(603609) , Shenzhen Kingsino Technology Co.Ltd(002548) .
Many institutions believe that as the de capacity of the pig breeding industry continues, the inflection point of the pig cycle is gradually approaching.
Guotai Junan Securities Co.Ltd(601211) Securities said that the price inflection point of this round of pig cycle is expected to be from April to June 2022. Under the background of low pig prices in the first quarter, the de capacity of pigs is expected to accelerate. Market expectations for the reversal of the pig cycle strengthened, catalyzing the recent plate performance.
pig price returns to the downward range
Recently, the trend of pork and pork stocks is quite the opposite. Data show that as of January 5, the price of Chinese pigs (foreign three yuan) was 16 yuan / kg, down 12% month on month and 57% year-on-year. After a staged rebound in the second half of 2021, pig prices have returned to the downward range since December.
The fundamental reason for the decline in pig prices lies in the comprehensive recovery of pig production capacity and the oversupply of pig market.
Zhuo Chuang information found that the pig supply will remain at a high level in the first quarter of 2022 through data indicators such as stock volume, slaughter weight and stock structure. January is still in the production capacity release period. The large-scale breeding group reduced its slaughter weight due to bearish outlook. In addition, winter is the high incidence period of various epidemics, and some small weight pigs were released in advance. The supply of pigs in January is abundant. From the demand side, although January is the Spring Festival stock period, affected by the epidemic situation, demand overdraft in advance and other factors, the demand for pigs in January is not ideal.
"At present, China's pig market is at the end of the pig cycle, and the pig price is still in the downward stage." Wang Na, research director of Everbright futures Shenzhen Agricultural Products Group Co.Ltd(000061) , said, "in this context, the state has actively introduced the policy of stabilizing the price and supply of pigs to deal with uncertain factors in the future. For example, the state actively regulates the price of pigs and promotes the stable and orderly market situation by regularly starting the collection and storage policy; the state has issued certain pig ownership indicators to all provinces to stabilize the national pig production capacity."
With the pig price once again entering the downward range, the profit of pig breeding is also "in jeopardy". Data show that as of last week, the profit of self breeding pigs was 39.77 yuan / head, which has been in the loss range for three consecutive weeks.
Industry insiders said that at the end of the pig cycle, the decline of pig prices and breeding losses are inevitable "pains", which can also accelerate the clearance of pig excess capacity and indirectly promote the large-scale pig breeding.
inflection point of pig cycle or in the second quarter
The latest statistics show that by the end of November, the number of fertile sows in China was 42.96 million, which has decreased for five consecutive months.
Although continuous progress has been made in de production of live pigs, the stock of fertile sows in China is still high. The implementation plan for regulation and control of pig production capacity (Provisional) issued by the Ministry of agriculture and rural areas in September pointed out that during the 14th Five Year Plan period, the normal number of fertile sows was stable at about 41 million, and the minimum number was no less than 37 million. At present, the population of about 43 million fertile sows still lags behind the target of about 41 million.
many institutions believe that with the further promotion of pig de capacity, the inflection point of this round of pig cycle may appear in the second quarter of this year.
China Industrial Securities Co.Ltd(601377) Guo Yuwei and Lu political commissar believe that the current pig cycle has been 44 months since it was opened in May 2018, which is close to the typical length of the past pig cycle, and a new pig cycle may be opened in the second quarter of 2022.
"However, China's pork consumption gradually declined after peaking in 2014. According to the current rhythm of reducing the production capacity of breeding sows, pork supply and demand may not return to a more balanced state until the first quarter of 2023." Guo Yuwei and Lu political commissar believe that under the background of overall oversupply of pork, it is difficult to obtain high breeding profits even if the pork price rebounds in the second half of 2022.
Ma Liyuan, an analyst at Zhuo Chuang information, believes that the low point of this round of pig cycle may appear from April to June 2022, when the pig price may be lower than the lowest price in 2021.
"From the fourth quarter of 2021 to the first half of 2022, there is still a production capacity release period. June 2021 is the high point of breeding sows. Coupled with the rebound of pig prices in October and November of that year, the pace of upstream capacity removal has been delayed. According to the calculation of pig growth cycle, it is expected that more pigs will be sold from April to June 2022." Ma Liyuan, an analyst, "as the weather turns hot, the demand will decline as a whole from April to June this year. Considering that most of the low points of the previous pig cycle appear around May, the low point of the current pig cycle may appear from April to June 2022."
(Shanghai Securities News)
