Since 2021, the Shenzhen Agricultural Products Group Co.Ltd(000061) prices of corn, soybean, wheat and rice have risen, and the prices have exceeded the high point in recent 10 years. There is still a large gap in some grains - according to the prediction of the Ministry of agriculture, the gap between China's corn output and consumption will reach about 15 million tons in 2022; In 2022, the gap between China's soybean production and consumption exceeded 100 million tons.
China still needs to import some grains, such as soybeans, corn and wheat, which are highly dependent on foreign countries and are greatly affected by the world. Ukraine, the United States, Brazil, Argentina and other countries are important suppliers of China's grain imports. Geographic conflict, inflation, climate change and other factors affect the tradable amount of grain:
1) under the influence of the Russian Ukrainian war, the output of main crops in Ukraine is expected to decline by 20-30%, and the exportable amount of grain in Russia and Ukraine is expected to decline significantly.
2) US inflation expectations, rising costs and other factors caused farmers to be reluctant to sell, and US corn and soybean futures prices continued to rise.
3) drought affects the soybean yield of Brazil, Argentina and other countries; The drought in the United States is expected to increase; In addition, last year's autumn flood in China caused late sowing of wheat, which posed a challenge to China's summer grain production.
We expect that affected by the above factors, grain prices are expected to continue to rise in 2022. The relevant targets of the planting industry chain are expected to benefit:
1) seed sector: the rise in grain prices drives farmers' planting enthusiasm, and farmers prefer to buy seeds with better quality to ensure output. We expect that in 2022, the head seed company is expected to usher in a boom in both volume and price. Superimposed genetically modified corn and soybean are expected to complete commercial sales, and seed enterprises with leading technical reserves and obvious quality advantages are expected to expand their market share. Continue to recommend [ Beijing Dabeinong Technology Group Co.Ltd(002385) ] (leading transgenic technology and the largest expanded area of Beijing Dabeinong Technology Group Co.Ltd(002385) bio transgenic corn), [ Yuan Longping High-Tech Agriculture Co.Ltd(000998) ] (the participating company has rich reserves of transgenic technology and outstanding advantages in traditional varieties and channels), [ Shandong Denghai Seeds Co.Ltd(002041) ] (leading corn seed, which is expected to seize the opportunity of transgenic corn), [ Winall Hi-Tech Seed Co.Ltd(300087) ] (relying on Syngenta group, it is expected to achieve leapfrog development).
2) agricultural materials sector: Xinyangfeng Agricultural Technology Co.Ltd(000902) (the leader of phosphorus and compound fertilizer and iron phosphate open the growth space).
3) planting and transportation sector: Jiangsu Provincial Agricultural Reclamation And Development Co.Ltd(601952) (mainly engaged in planting rice, wheat and other crops), Heilongjiang Agriculture Company Limited(600598) (mainly engaged in planting rice, corn and other crops), Xiamen Xiangyu Co.Ltd(600057) ( Shenzhen Agricultural Products Group Co.Ltd(000061) supply chain).
4) agricultural water saving sector: Dayu Water-Saving Group Co.Ltd(300021) (agricultural water saving faucet company, benefiting from industrial opportunities such as high standard farmland construction).
Risk warning: the rise of grain price is less than expected, the risk of policy change and import change
