Report guide
The epidemic prevention and control affected the transportation of pigs + farmers' reluctance to sell, increased the difficulty of procurement, and the pig price rose slightly, but the weak end consumption indicates that the deep decline of pig price is inevitable; The rise in global food prices may accelerate the implementation of transgenic breeding.
Key investment points
Market review this week
The agriculture, forestry, animal husbandry and fishery sector underperformed the market. Last week (2022 / 3 / 282022 / 4 / 1), the CSI 300 index rose 2.43%, and the Shenwan agriculture, forestry, animal husbandry and fishery index rose 2.08% in the same period, 0.36 percentage points lower than the CSI 300 index, ranking 12th among the 28 Shenwan level industries.
From the sub sectors of agriculture, forestry, animal husbandry and fishery, the growth and decline of planting / fishery / Shenzhen Agricultural Products Group Co.Ltd(000061) processing / livestock and poultry breeding / feed / animal health care sector last week were 1.56%, - 0.26%, - 0.33%, 3.43%, 1.60% and - 1.24% respectively.
Core ideas of this week
[pig] demand support is limited, and pig prices may fall further
The average price of pigs in Boxun rose by 12.53% year-on-year, with the average price of pigs in Boxun rising by 23.53% year-on-year; The loss of self breeding was 531.05 yuan / head, with a month on month decrease of 3.31% and a year-on-year decrease of 154.10%; The loss of purchased breeding was 292.39 yuan / head, which increased by 1.87% month on month and decreased by 13.18% year-on-year. We believe that the main reasons for the recent slight rise in pig prices are as follows: the prevention and control of covid-19 epidemic has led to poor pig transportation, some slaughtering enterprises in Northeast China have stopped slaughtering, and the amount of white striped pork has been significantly reduced; Affected by the epidemic prevention and control and collection and storage policies, farmers are reluctant to sell at high prices, which further increases the difficulty of purchasing by slaughtering enterprises; Short term hoarding on the demand side increased. We believe that since March, the multi-point outbreak of the epidemic has impacted on terminal consumption, with limited support for pig prices, and the retail sale has slowed down after the Spring Festival. In addition, the epidemic is serious in some provinces, especially in the northeast region (Jilin and Liaoning), the weight of pigs kept by retail investors has increased. In the follow-up, if the impact of the epidemic weakens, the distribution and transportation of pigs is restored, or there is the possibility of centralized sale, the subsequent supply of pigs is still loose, It is expected that pig prices will fall again in the next two weeks.
In March, the range of capacity removal may be expanded month on month, and a new round of accelerated elimination may be started in the second quarter.
In March, the national pig prices fell sharply in a row, while the feed cost continued to rise after the conflict between Russia and Ukraine in late February, and the losses of farmers continued to increase. We expect the decline in the number of fertile sows in China to expand month on month in March. However, according to the data of Yongyi consulting, at present, the price of eliminated sows is still 50% higher than that of fattening pigs, and the price difference between eliminated sows and fattening pigs is small, which reflects that under the background that the market is generally optimistic about the market in the second half of the year or next year, the sentiment of farmers' capacity removal is not strong enough. We believe that there is no significant elimination of sows in the pig breeding group represented by Cr40 at present. With the continuous intensification of breeding losses in the second quarter, capacity de industrialization will take place in these large group farms. Continue to recommend to grasp the direction of the trend change of pig cycle.
[white feather broiler] the chicken was gradually recovered, and the chicken continued to increase. The slaughtering enterprises' enthusiasm for purchasing was weakened. It is estimated that the price of chicken or chicken will be adjusted next week, and there will be a downward risk later. Pay attention to the transaction of chicken. In the 4-5 month, there was a downward trend in broiler fattening, supporting farmers to make up for hurdles, but with the increase in chicken prices and feed costs, there was still a risk of loss.
[planting chain] what is the impact of geopolitical conflict and drought in South America on China's Shenzhen Agricultural Products Group Co.Ltd(000061) price? As of April 1, 2022, the spot price of corn in China has reached 2837 yuan / ton, up nearly 5% from the beginning of January; The spot price of wheat reached 3187 yuan / ton, up 10% from the beginning of January; The spot price of soybean reached 5505 yuan / ton, up 6% from the beginning of January; The spot price of soybean meal reached 4589 yuan / ton, up 38% from the beginning of January.
China's soybean, corn, wheat and other Shenzhen Agricultural Products Group Co.Ltd(000061) still rely on some imports and are greatly affected by the international market. Russia, Ukraine, Brazil and Argentina are the main suppliers of China's Shenzhen Agricultural Products Group Co.Ltd(000061) imports. The conflict between Russia and Ukraine and the dry weather in South America may have an impact on global grain production and supply, and the fluctuation of global grain prices may have a linkage impact on China's planting chain. Specifically: (1) more than 85% of China's soybeans are imported from Brazil and the United States. The weather in the main soybean producing areas of South America is suffering from drought, resulting in the soybean output of Argentina, Brazil and Paraguay far lower than originally expected, affecting the global soybean supply, and the soybean price outside China may rise in linkage; (2) China has a high self-sufficiency rate of wheat and rice and is less affected by the international market, but some of the high-quality wheat imported for the production of bread may cause a certain conduction pressure, but the impact is limited; (3) There is still a certain gap between supply and demand of corn in China, and the growth rate of import volume in the past two years is more than 10%. In 21 / 22, the import volume of corn reached 29.85 million tons, mainly from Ukraine and the United States. Last year, the proportion of imports from Ukraine reached 30%. The recent conflict between Russia and Ukraine may have an impact on the export and shipment of corn in Ukraine, but China's corn output in 2021 / 22 exceeded a record high, In addition, this year, the demand side is affected by the de production capacity of pigs and the substitution effect of Shenzhen Agricultural Products Group Co.Ltd(000061) such as sorghum and barley. The impact of import fluctuations on China's corn price may be unsustainable. The recent continuous rise of corn price is also affected by the poor transportation caused by the epidemic prevention and control. It is expected that the corn price is expected to fall slightly from the high level after the epidemic prevention and control is lifted.
In addition, we are concerned that the current military struggle between the two countries has gradually cooled down, but the supply and demand pattern of global energy, food and agricultural materials has not changed greatly. Geopolitical conflicts and energy sanctions are still likely to continue. The global pricing of energy such as oil and natural gas may remain high and fluctuate, which will push up the prices of agricultural materials such as pesticides and fertilizers in the downstream and increase the cost of food production, Or have a potential negative impact on medium and long-term grain production outside China. In the context of food security, biological breeding technology can solve the problem of oil shortage in China from the perspective of productivity factors and ensure China's food security. It is expected that the commercialization process of genetically modified organisms breeding in China is expected to make a breakthrough. We may see the introduction of seed production pilot scheme in 2022, the charging method of genetically modified traits may be further implemented within the year, and seed enterprises with obvious advantages in technology and quality may take the lead in benefiting.
Investment advice
[pig breeding] in the cold winter of breeding, we select the target based on the two main lines of "not going bankrupt" and "expected marketing", and recommend Hunan New Wellful Co.Ltd(600975) , Muyuan Foods Co.Ltd(002714) and other enterprises with abundant cash flow and cashable marketing.
[white feather broiler] the industrial chain has experienced a loss for one year. The deep loss in the downstream inhibits the enthusiasm of making up the fence. The decline in the price of chicken seedlings affects the profits of the incubator, or forces the chicken breeding farm to take the initiative to reduce the production capacity. We may see the month on month contraction of the supply of chicken seedlings in the third quarter of 2022, and pay attention to the changes in the stock of grandparents' generation chickens and parents' generation chickens in production. Recommend enterprises that focus on the layout of the whole industrial chain business and the target of the upstream main chicken seedling sales business.
[dynamic insurance] the sector has fallen to a reasonable range due to the drag of pig price. It is expected that the reversal of pig price in the second half of 2022 will lead to the upward prosperity of the industry, and the sector is expected to usher in valuation repair. It is suggested to lay out at a low level. It is recommended to focus on Pulike Biological Engineering Inc(603566) , which has obvious advantages in subunit vaccine research and development, and industry leaders with rich product reserves.
[planting chain] focus on the subject that directly benefits from the rise of grain prices; The rise of grain prices drives the prosperity of seed industry. It is recommended to pay attention to Beijing Dabeinong Technology Group Co.Ltd(002385) (rich reserves of genetically modified traits) and Yuan Longping High-Tech Agriculture Co.Ltd(000998) (the leader of corn and rice seeds).
Risk tips
Covid-19 epidemic spread risk, international situation change risk, policy implementation less than expected risk, etc.
