Second Senior Brother will finally usher in the dawn after experiencing the torment at the bottom of the cycle.

Recently, there is news that soybean meal prices have loosened to some extent. At the same time, some feed companies have also issued price reduction notices. At the same time as the good news on the cost side, along with the reduction of production capacity of pig enterprises, many securities companies issued research reports saying that the pig cycle in 2022 is imminently reversed. Analysts interviewed said that the domestic supply of live pigs may continue to shrink in the second half of 2022. In addition, with the arrival of the peak consumption season in the fourth quarter, the price of pigs in the third and fourth quarters may fluctuate and rise as a whole, and the pig breeding industry may gradually get rid of losses.

The pig breeding may gradually get rid of the loss situation in the second half of the year

The expected reversal of the pig cycle is one of the hot topics in the market recently. A securities firm published a research report focusing on the reversal trend of the pig cycle. Pacific Securities said that the reversal of the pig cycle is imminent, and it is optimistic about the beta market of the breeding sector. Kaiyuan Securities recommends laying out a production capacity reduction period. CICC pointed out that the current industry-level pig price continues to be low and feed costs are rising, and the enterprise-level asset-liability ratio is at a historically high level, which continues to strengthen the cycle reversal expectations under the reduction of production capacity. China Merchants Securities predicts that the supply of live pigs will decline after reaching a peak from March to May. With the advent of the peak consumption season in the second half of the year, the mid-year reversal of pig prices can be expected.

 With the strengthening of expectations and the advance of stock prices, the stock prices of many pig-raising companies in the A-share market have danced. According to the statistics of Oriental Fortune Choice, since 2022, a total of 7 of the 10 companies in the pig breeding sector of Shenwan Industry have achieved share price increases. Ng Fung and Tianbang shares rose by 51.25% and 27.02% respectively. In addition, Wen's, New Hope, Dawnrays and other companies also achieved varying degrees of growth. The attention and expectation of the pig breeding sector is evident.

Analysts interviewed believe that the pig cycle is expected to usher in a turning point in 2022, and the profitability of pig farming enterprises is the fastest or will improve within this year.

Zhuochuang Information analyst Li Sujie told the Securities Daily reporter that according to monitoring, due to the ability to breed sows in July 2021 According to the calculation of the growth cycle, it is expected that the slaughter volume will reach the peak in May 2022. From the perspective of the development trend of the pig cycle, in 2022, we believe that the first half of the year is still in the production capacity release period, and the pig price may see a slight increase in the second half of the year. We predict that the bottom of the pig cycle in 2022 will be at the end of the second quarter, and may appear around May. The price is low.

Xu Xueping, a pig analyst at the Agricultural Products Division of Shanghai Ganglian, analyzed to the Securities Daily reporter: According to the analysis of the Securities Daily reporter According to the calculation of the transmission cycle of live pig production, changes in the number of sows will affect the supply of live pigs in 10 to 12 months. Beginning in July 2021, the domestic breeding sow population has been in a state of continuous decline as a whole. Entering the second half of 2022, domestic The supply of live pigs may continue to shrink, and with the arrival of the peak consumption season in the fourth quarter, under the influence of the two-way deterministic factors of supply and demand, the price of pigs in the third and fourth quarters may fluctuate and rise as a whole, and the pig breeding industry may gradually get rid of the loss situation.”

The cumulative reduction of live pig production capacity has exceeded 6% 

From the perspective of listed companies, optimizing production costs and controlling the pace of expansion of live pig production capacity are one of its priorities. Data show that in the first three months of this year, the sales of live pigs (or commercial pigs) achieved by New Hope, Muyuan, Zhengbang Technology, and Tianbang were 3.6968 million, 13.817 million, 2.4261 million, and 1.0043 million, respectively. The sales volume of Zhengbang Technology and Tianbang Co., Ltd. in the first three months has decreased slightly year-on-year. When interacting with investors, New Hope stated that the company has passed the stage of rapid expansion, and will shift to the stage of production and operation from 2021, and will rationally arrange the pace of business expansion based on its own and external conditions.

In the expectation that the pig cycle is expected to usher in a reversal, the reduction of pig production capacity is the focus of analysts. Xu Xueping said that according to the data monitoring of Mysteel agricultural products, the average loss of self-propagating and self-raising pigs at the breeding end reached 340 yuan per head in the first quarter.

Hua Chuang Securities believes that since the peak of live pig production capacity in June 2021, the cumulative reduction rate has exceeded 6%. After nearly three quarters of production capacity adjustment, the industry is gradually transitioning from the active elimination of backward and inefficient production capacity to the passive production capacity reduction stage. Since the industry side still holds relatively optimistic pig price expectations for the second half of the year and even next year, the overall game sentiment It is still relatively strong, and the process of capacity reduction may be more tangled and tragic.

At this stage, the price of pigs is still below the cost line, so production capacity will continue to be eliminated. However, from April, Its slowdown has slowed down. The industry is optimistic about the market in the second half of the year. Some farmers have begun to supplement the pen. The price of piglets is now showing an upward trend. Slowly, some large-scale enterprises have transferred piglets from export to domestic, and the production capacity reduction will gradually enter the final stage. Li Sujie said.

It is worth mentioning that the increase in the price of agricultural products has pushed up the cost of feed, and it is believed that it will also accelerate the reduction of production capacity of live pigs. In the near future, corn and soybean meal are in a volatile trend. Chen Qingqing, a corn analyst at the Agricultural Products Division of Shanghai Ganglian, told the Securities Daily reporter that after entering the second quarter, with the decline in trade links and the rise in storage costs, the price of corn may usher in a Opportunity to go higher; in the process of market operation, it is necessary to pay attention to the price parity relationship between corn and related substitutes and the processing profit of downstream enterprises. There is still a ceiling for corn prices to rise. Fang Ping, soybean meal analyst at the Agricultural Products Division of Shanghai Ganglian, said that the short-term view on domestic continuous meal is still cautious. The arrival of soybeans in April and May is close at hand, and the auction of reserved soybeans for several consecutive weeks has also become a foregone conclusion. The pressure on moon soybean meal cannot be relieved.