The price of chicken seedlings has risen by more than 1.5 times in recent three weeks. Can the broiler industry get out of the downturn?

Since late March, the continuously depressed broiler breeding industry has gradually warmed up, and the price of chicken seedlings has increased by more than 1.5 times in recent three weeks. According to Mysteel Shenzhen Agricultural Products Group Co.Ltd(000061) data, the national average price of chicken seedlings rose from 0.69 yuan / feather on March 23 to 1.84 yuan / feather on April 13, an increase of 166.67%, but the decline was still as high as 53.91% compared with the same period last year.

What are the reasons for the continuous rise in the price of chicken seedlings recently? Whether the current round of rise can be sustained and whether the broiler industry can completely get out of the dilemma of continuous downturn since the second half of 2021?

chicken industry recovery

chicken seedlings increased by more than 1.5 times in recent three weeks

Since 2022, the price of chicken seedlings has been running low, and the average price of chicken seedlings in China was once lower than 0.7 yuan / feather. Liu Xiaoying, an analyst of Zhuo Chuang information broiler industry, said in an interview with the reporter of Securities Daily that the on-the-job rate of workers in slaughtering enterprises is not high after the beginning of this year, adding to the sluggish consumption of broilers after the festival, slaughtering enterprises started relatively late, putting pressure on upstream broiler breeding, and the prices of wool chicken and chicken seedlings have been running low.

The performance forecast released by Shandong Minhe Animal Husbandry Co.Ltd(002234) on April 14 shows that the company lost 170 million yuan to 200 million yuan in the first quarter of this year, while the company made a profit of 134 million yuan in the first quarter of last year. On April 15, Shandong Yisheng Livestock & Poultry Breeding Co.Ltd(002458) disclosed a quarterly performance loss of 288 million yuan.

For the main reason why the performance turned from profit to loss, the two companies said that the market of white feather broilers in the first quarter was poor, and the price of chicken seedlings decreased significantly year-on-year. In addition, the price of feed raw materials such as soybean meal increased significantly during the reporting period, resulting in an increase in production costs.

“The price of wool chicken is low, but the feed price is rising driven by soybean meal and corn, and the cost pressure of breeding has increased greatly. The industry as a whole lost money in the first few months of this year.” Feng Nan, Secretary General of the poultry branch of Shandong Animal Husbandry Association, told the Securities Daily that some farms, especially small and medium-sized farmers, began to reduce losses by reducing production or empty columns.

However, in late March, the price of chicken seedlings stabilized and rebounded, and continued to rise.

A number of Listed Companies in the broiler industry confirmed to the Securities Daily that, similar to the national market situation, the price of chicken seedlings in Shandong, a representative area of broiler breeding, is also rising rapidly. “Especially in recent days, the price of white feather broiler seedlings is basically one price a day.” On April 15, Shandong Yisheng Livestock & Poultry Breeding Co.Ltd(002458) broiler chick seedling price increased by 2 hairs / feather to 3.1 yuan / feather, up 158.33% from 1.2 yuan / feather in late March.

warming up

incubated enterprises centralized capacity removal

Zhuo Chuang information data show that the price of white feather broiler chicken seedlings showed an upward trend in April. The price of chicken seedlings increased from 1.8 yuan / feather on the 1st to 2.31 yuan / feather on the 13th, with a cumulative increase of 22.22% and a month on month increase of 79.82%.

Shandong Yisheng Livestock & Poultry Breeding Co.Ltd(002458) board secretary Lin Jie told the reporter of Securities Daily, “the recent rise in the price of chicken seedlings is mainly driven by the rise in the price of wool chicken.”

According to the data of Zhuo Chuang information, the price of white feather broiler and wool chicken showed a V-shaped trend from January to April this year: the price of wool chicken fell from January to February and rose from March to April. The purchase price of wool chicken fell from 3.83 yuan / kg in early January to 3.47 yuan / kg in late February. At the end of March, the price of wool chicken had risen to 4.20 yuan / kg. As of April 13, the price of wool chicken had risen to 4.35 yuan / kg.

Liu Xiaoying said in an interview with the reporter of Securities Daily, “since March, the price of hairy chicken has taken the lead in rising. By late March, the profit of each hairy chicken of farmers has reached 2 yuan, and the enthusiasm to fill the column has increased, thus increasing the demand for chicken seedlings and driving its price up.”

In addition, it is worth noting that on the supply side, incubation enterprises have reduced the supply of chicken seedlings by eliminating breeding chickens. For example, Shandong Minhe Animal Husbandry Co.Ltd(002234) 2022 sold 17.755 million commercial substitute chicken seedlings in March, a year-on-year decrease of 36.75%. “Due to the poor market of white feather broilers recently, the company took the initiative to reduce the output of chicken seedlings according to the market situation,” the company said

“From February to March, the price of chicken seedlings was low, and the hatching enterprises suffered serious losses. In order to reduce the losses, the enterprises concentrated on reducing the production capacity by 20% – 30% by eliminating week old breeding chickens, feathering, sucking eggs and harmless treatment, resulting in the reduction of the supply of chicken seedlings.” Liu Xiaoying said that in April, the price of white feather broiler rose, farmers turned losses into profits, superimposed the decline in feed prices, farmers’ enthusiasm to make up fences increased, supply and demand both benefited the market, and seedling prices rose.

chicken seedlings may still operate at a high level

industry inflection point still needs time

How long this round of price increases will last is the focus of the market.

Liu Xiaoying said, “from the current situation, the whole supply of hairy chicken in May is still tight, and the price of hairy chicken will still run at a high level at that time. Therefore, the price of chicken seedlings may remain high after the continuous rise.”

“From the perspective of both supply and demand, with the relief of the epidemic and economic recovery, the consumption side will have a good trend in the future. On the supply side, the de production capacity of white feather broilers is determined, and the production capacity of breeding and slaughtering links is being de transformed.” Lin Jie said.

Does this round of price increase mean that the industry will smoothly get out of the trough?

“It’s too early to talk about the inflection point.” An industry person who declined to be named told the Securities Daily that the profits of the broiler industry continued to decline in the second half of last year. In the first quarter of this year, the performance of broiler enterprises may decline further due to the double squeeze of lower product prices and high feed costs. The current round of price rise of wool chicken and chicken seedlings will help enterprises reduce losses, but it will take time for the industry to reach the inflection point.

Feng Nan also said that the broiler industry has a certain periodicity. Generally, there will be adjustment and contraction after the high boom. After the adjustment is in place, the boom will gradually recover. The prosperity of the industry was high in 2019, and the hot profit-making effect led to the rapid expansion of the industry’s production capacity. At present, the industry’s production capacity is still at a relatively high level. After the backward production capacity is further cleared, the industry may usher in an inflection point. This clearing of production capacity, on the one hand, is to realize the self-renewal and self-growth of the industry through the law of value. On the other hand, with the improvement of environmental protection and technical requirements of the industry, it will also make some small and medium-sized farmers with backward technology and equipment gradually withdraw from the market, so as to further improve the industry concentration, environmental protection and equipment level.

- Advertisment -