Core view
In February, CPI rose year-on-year, while pig prices fell significantly. In February, China’s CPI was + 0.9% year-on-year, of which food prices were – 3.9% year-on-year and pork in food was – 42.5% year-on-year. CPI in February was + 0.6% month on month, of which food items were + 1.4% month on month. During this period, pork prices were in a downward range, affecting CPI pork chain ratio of – 4.6%. In February, China Shenzhen Agricultural Products Group Co.Ltd(000061) imported US $14.271 billion, a year-on-year increase of + 8.34%, exported US $5.210 billion, a year-on-year increase of + 10.04%, and had a trade deficit of US $9.061 billion, a year-on-year increase of + 7.39%.
In March, the pig price fluctuated downward, and the extremely deep loss continued for 22 years. We firmly recommend the pig cycle. The core view is that in the bottom stage of the pig cycle, the deep loss period is the best time to layout breeding stocks. From the perspective of expectation, the risk of breeding stocks has been largely released under the state of extreme deep loss, the safety margin is very high, and the future expectation is good. With the continuous bottom seeking of pig prices and the rise of feed raw material prices, the double pressure intensifies the loss, and the production capacity continues to clear, which is good for the industry to meet the dawn. The stock price of the cycle industry is the first. Based on our judgment of the second bottom of 22q2-3, we expect to lay out the sub optimal time point of breeding stocks before the second bottom of pig price. On March 18, 22, the average price of pigs was 12.13 yuan / kg. By the end of February, 42.68 million sows could be bred, about – 0.5% month on month. From the demand side, consumption is in the off-season. In March, the loss of self breeding and autotrophy reached more than 500 yuan / head, which was in a very deep loss state. From the multiple indicators we track, the pig cycle is still in the process of secondary bottom finding. Even though many voices believe that the second bottom / inflection point may be delayed (to 23 years), we observe from the aspects of sows, piglets, profits, weight and so on. The data trend is still in our changing trend, waiting for the reversal of the 22-year cycle.
At the end of the month, the average price of yellow chicken was – 37.0% higher than that of yellow chicken on March, and the average price of yellow chicken remained to be cleared at the end of February. Based on the analysis of the stock of yellow chicken grandparents, parents and prices, we believe that the capacity end of yellow feather chicken in 22 years will continue the 21-year clearing trend, or there will be a potential capacity inflection point in 22q3-4. At the level of breeding cost, the prices of raw materials such as corn and soybean meal continued to rise, squeezing the profit space to a certain extent.
The performance of Shanghai and Shenzhen agricultural sector fell by 25.0% in the same period from the beginning of the year to the top of Shanghai and Shenzhen in June 2020 (the performance of Shanghai and Shenzhen feed industry fell by 25.0% in the same period). Among the sub sectors, forestry fell the most (- 17.3%), followed by comprehensive agriculture and animal health care. Feed, fishery and Shenzhen Agricultural Products Group Co.Ltd(000061) processing led the increase, with + 12.94%, + 5.69% and + + 1.54% respectively.
It is suggested that the second best time for the layout of breeding stocks is expected to be before the second bottom of pig price, pay attention to a “leading” pig enterprise Muyuan Foods Co.Ltd(002714) , New Hope Liuhe Co.Ltd(000876) , Wens Foodstuff Group Co.Ltd(300498) ; II. “Small and beautiful” pig enterprises Tangrenshen Group Co.Ltd(002567) , Fujian Aonong Biological Technology Group Incorporation Limited(603363) , Tecon Biology Co.Ltd(002100) . The price of yellow chicken goes up, focusing on the leading Jiangsu Lihua Animal Husbandry Co.Ltd(300761) . The concentration of feed industry has increased, leading enterprises have the advantage of supply chain, and pay attention to Guangdong Haid Group Co.Limited(002311) . Focus on animal vaccines α Elastic Pulike Biological Engineering Inc(603566) .
