Core view
Pig breeding: in April, the decline in the number of fertile sows narrowed, and the number of pigs decreased year-on-year. According to Yongyi information, the pig price on May 20 was 15.58 yuan / kg, up 2.84% on a weekly basis. (1) Production capacity deregulation slowed down and pig stocks decreased year-on-year. According to the latest data from the Ministry of agriculture and rural areas, the number of fertile sows in China at the end of April was 41.773 million, a month on month decrease of 0.18%, narrowed compared with March (month on month – 1.94%), and has been eliminated by 8.47%. In addition, at present, there are 424 million pigs on hand, a year-on-year decrease of 0.2%, which is the first year-on-year decrease since June 2020. Experts from the Ministry of agriculture and rural areas said that the de capacity of pigs is coming to an end. (2) The central government’s eighth pork purchase and storage continued to boost the bullish mentality of the market. The central government started the collection and storage of the eighth batch of frozen pork in the central reserve in 2022, with a bidding transaction of 40000 tons, which was carried out on May 20. The continuous collection and storage actions of the central government will further boost market confidence and stabilize market expectations. (3) Pork imports continued to decrease in April, which may benefit China’s pig industry. According to the latest data of the General Administration of customs, the pork import volume in April 2022 was 140000 tons, a year-on-year decrease of 67.6%, and the cumulative pork import volume from January to April was 560000 tons, a year-on-year decrease of 65.1%. Due to the increase of import tariffs and the release of China’s pig production capacity, the demand for pork imports continues to decrease, or to some extent, it is good for the rise of China’s pig prices. (4) Reluctant to sell bars and increase secondary fattening actions, or increase the supply pressure of long-term pigs. At present, the temperature is gradually rising, pork consumption is in the off-season, and covid-19 epidemic restricts catering consumption, so there is no obvious positive support on the demand side. On the supply side, farmers are reluctant to sell and press the fence, and the action of secondary fattening is increasing. Although the short-term supply is tight, it may release some supply pressure in the future in the long term or in the case of centralized marketing. We suggest paying attention to breeding enterprises with stable operation and significant cost control advantages.
Seed industry: China’s grain prices are expected to remain high, and the seed industry is expected to maintain a high boom. (1) There is a foundation for a bumper harvest of summer grain, and the acquisition work is ready. On May 16, the Ministry of agriculture and rural areas held a meeting on the national “three summer” production. The meeting stressed that we should go all out to fight the hard battle of wheat machine harvest, pay close attention to the work of fine summer harvest, summer planting and summer management, ensure that summer grain particles are stored in the warehouse and consolidate the foundation of grain production throughout the year. On May 19, the State Food and material reserve bureau released information that the minimum purchase price of summer grain this year has been comprehensively increased, and the purchase volume is expected to increase steadily. At the same time, it said that it is necessary to expand the collection and storage capacity to ensure that farmers “get the money from the sale of grain”. (2) Afghanistan has banned wheat exports and is vigilant against food protectionism. Following India’s announcement of a ban on wheat exports, Afghanistan ordered a ban on wheat exports on May 19 local time. Previously, many countries also issued export restriction policies on Shenzhen Agricultural Products Group Co.Ltd(000061) such as sugar, rice and palm oil. (3) In April, the import volume of corn and soybean increased year-on-year, and China’s grain prices are facing import upward pressure. According to the latest data from the General Administration of customs, in April, China imported 2.21 million tons of corn and soybeans (year-on-year + 19.4%) and 8.08 million tons (year-on-year + 8.5%). The international policy of restricting Shenzhen Agricultural Products Group Co.Ltd(000061) exports in many countries may boost the continued rise of international grain prices. China’s corn and soybean imports are large, and China’s grain prices may face import upward pressure. China’s grain prices are expected to remain high and the seed industry is expected to maintain a high boom. In addition, the early supporting industrial policies help the development of biological breeding technology. We suggest paying attention to seed enterprises with obvious advantages of transgenic technology and core breeding advantages.
Investment advice
Pig breeding: sows that can be bred continue to be depopulated. At present, the production capacity has entered the green range, which is expected to support the rise of pig prices. It is suggested to pay attention to breeding enterprises with stable operation and significant cost control advantages.
Seed industry: China’s grain prices are facing import upward pressure, and grain prices are expected to maintain a high boom. With policy support, it is suggested to pay attention to the leading seed enterprises with obvious advantages of transgenic technology and core breeding advantages.
Risk tips
Macroeconomic fluctuations; Non plague situation; Extreme weather effects, etc.
