The prices of agricultural products have risen sharply as a result of outbreaks, international problems and global weather changes. In addition, the rise in electricity and energy prices has led to a rise in the prices of chemical fertilizers and agricultural basic supply factors, and also led to a rise in the global prices of agricultural products. Chicago wheat futures hit an all-time high in intraday trading on March 8, with a recent pullback. A number of countries have imposed grain export bans. Domestically, China's grain production has remained above 1.3 trillion jin for seven consecutive years, and the output of the two major grain varieties, rice and wheat, has been stable as a whole. How is the overall market of the agricultural sector in the second half of 2022? Whether the situation of high volume and price will continue, and how will the subdivided areas such as farming and cultivation perform?

On July 15, [Zhao Jinhou], chief analyst of Shenwan Hongyuan Research on Agriculture, Forestry, Animal Husbandry and Fisheries, was presented byThepaper.cn X Wall Street newsJointly launched "the way to revive the overall Economic Market--" Chief Link "2022 medium-term Market Outlook"Direct broadcast of agricultureI discussed with you whether agriculture can usher in the Lunar New year under the economic recovery. And make the following judgment and sharing:

Summary of opinions

1. The three elements of supply, demand and money together constitute the rising or fluctuating system of international food prices.Geographical conflicts in major producing countries, weather, export restrictions and rising international oil prices all affect supply.
2. There are two ways to transmit the rise in international oil prices to the rise in food prices. First, the cost of agricultural materials and chemical fertilizer is pushed up, and what is more important is the change in supply. When the oil price rises, the demand for ethanol fuel will rise, and more crops will be used to produce fuel ethanol.From the point of view of supply and demand, international food prices are more likely to fall if they do not support a large-scale and sustained rise.
3. China's grain prices are not entirely determined by supply and demand, and China's grain policy plays a very important role in the medium-and long-term trend of grain prices.In the short term, it may fluctuate under the influence of international prices, but the overall trend is still steady and rising.
4. 2021The year 2000 will be a year of great strides in the promotion of transgenic planting.In June, the National Variety approval Committee announced the standards for the approval of genetically modified corn and soybean varieties. Clear the obstacles of policies and regulations, operation procedures and operation requirements. Transgenic has a great impact on the upgrading of the seed industry, and the industry concentration will tilt to the seed companies with more scientific research strength and the integration of breeding and breeding.
5. The significant increase in short-term pork prices is mainly due to a periodic decrease in supply. One is the conduction effect of sows that were able to reproduce last year. The second is the advance of commercial pigs. At the same time, state reserves have also reduced supply. AndThe import of breeding pigs is also very small this year. In this case, pig farming enterprises and farmers cherish the short-term sale of pressure bars, aggravating the contradiction in supply and leading to a rapid rise in pig prices.
6. Pig farming plate initiative to capacity has come to an end, pig prices continue to rebound and profit improvement, is the certainty of expectations.The plate is still worthy of attention.
7. Pet food is a very good track, but the competition is fierce at present.There is no absolute leading enterprise.Be optimistic about the enterprises supported by overseas export business.Its industrial foundation is relatively good, and its advantage in the future competition will be more obvious.
8. The strategy of the agricultural sector in the second half of the year continues the main line of performance growth driven by rising prices in the first half of the year.Mainly focus on grain cultivation, pig breeding, yellow-feathered broilers, eel breeding and so on. In addition, the seed industry focuses on the promotion and planting process of genetically modified seeds; animal vaccines pay attention to the research and development process of new African classical swine fever vaccine and other investment opportunities that have a significant impact on the industry.

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Looking forward to the overall market of A-share agricultural sector in the second half of this year?

The agricultural sector as a whole performed better in the first half of this year. As of June 28, the excess income of the whole agricultural sector relative to Shanghai and Shenzhen 300 was about 7.88%. Agriculture ranked in the top six of Shenwan's 31 sub-industries, and the absolute income only fell by 1.66%. The market in the first half of the year should be said to be good.

The reason is that there are two hot spots in the entire agricultural sector this year: one is the rise in international food prices. The second is the pig cycle, pig prices are expected to rise, especially the "pig cycle" this hot spot, the proportion of the whole pig plate is still relatively large. As a whole, the agricultural sector performed better in the first half of the year.

How to grasp the agricultural industry in the second half of the year?Well, we have to see whether the factors supporting the strength of the agricultural sector in the first half of the year will change. The first is the price of food. We must first distinguish between international grain prices and domestic grain prices. The drivers behind these two logic are not the same. The three elements of supply, demand and money together constitute the rising or fluctuating system of international food prices. International food prices are mainly the prices of international trade, and the main factors that affect supply in the main producing country include: the geographical conflict in the main producing country. The second is the unique influence factor of agricultural production-the weather. Then there are export restrictions from exporting countries. In addition, there is a rise in international oil prices.

Why does the rise in international oil prices transmit to the rise in food prices? There are two ways. One is the increase in the cost of agricultural materials and fertilizers, and more importantly, the change in supply. When the oil price rises, the demand for ethanol fuel will rise, and more corn and sugar cane will be used to produce fuel ethanol, which in theory will reduce the supply of corn as food.

Therefore, geographical conflicts in major producing countries, weather, export restrictions and rising international oil prices will all affect supply fluctuations.

On the whole, the total consumption increases with the increase of population. At present, the global population is growing moderately, but from the perspective of international trade, once prices rise, countries will worry about the guarantee of their future imports, and they will increase imports and replenish stocks quickly. This will also affect international prices periodically.

Another factor is monetary easing. At present, major international agricultural products have futures prices. Loose commodity markets, supported by inflation expectations and adverse weather, will push up futures for agricultural products, including food prices. Futures will affect the guidance of spot.

On the whole, it is a variety of factors that push up and down food prices. Of course, the core is still based on fluctuations in supply and production.

Recently, there has been a relatively obvious drop in international grain prices, how to go behind? We have to see if there are any great changes in international supply and demand among so many factors. This needs to be divided into varieties first.

For example, soybean, its important influencing factor is the reduction of yield. The decline in soybean acreage in the United States the year before last led to a reduction in soybean production. Last year, production was mainly reduced due to drought in South America. Well, this year, the market generally predicts that the sown area will increase this year. If there are no major natural disasters, the supply will increase. Therefore, from a supply point of view, the price of soybeans should be said to be a higher level of downward pressure. The current market has already reflected.

The overall yield of corn will increase. Corn production has not been reduced in recent years, and prices have been largely driven up by rising oil prices. There is no doubt that wheat was caused by the conflict between Russia and Ukraine. Russia and Ukraine are major wheat exporters. Wheat cannot be shipped out after the conflict, so its output is available, but inventory cannot be turned into an effective supply, reducing supply in international trade and pushing up prices. Well, there has been a slight decline recently. I think the main reason is that international public opinion wants to release the wheat stocks of these two countries. This actually increases supply and suppresses prices. But in the new planting year, the output of these two countries will certainly be reduced. So overall wheat production may be difficult to increase this year, so prices are still supported.

Therefore, from the perspective of supply and demand, international food prices do not support a large-scale and sustained rise, it should be said that the probability of decline is a little greater.

The growth cycle of wheat, rice and corn is 270 days, 150 days and 120 days respectively. Therefore, some scholars believe that the process of grain market adjustment may not exceed 18 months and can be rebalanced through more than two market rotations in the northern and southern hemispheres. What do you think of this judgment?

It still depends on whether the whole new grain production increases or decreases. Now that the conflict between Russia and Ukraine continues, it is difficult to increase the yield of wheat. However, rice is mainly produced in Southeast Asia and Asia, and its output will not be reduced. Corn and soybeans, mainly in America, will also stimulate increased production under the current high prices.

Therefore, I think the overall supply in the next year will increase, so prices have been adjusted in the short term. However, some varieties may not necessarily increase production due to changes in supply and demand, so there is still room for upward price. If there is a significant increase in production, then prices should continue to fall. It mainly depends on the substantial changes in global food production in the future.

In the process of production, we should also pay special attention to the influence of the weather. If the adverse weather happens again, production may be cut again, and grain prices will turn up again. If the weather is fine and production increases more than expected, there will be obvious pressure on prices to rise. Therefore, in the future, we should pay close attention to the actual output and the actual supply.

The analytical logic of China's grain price is different from that of the world. China's grain is not entirely determined by supply and demand, in which China's grain policy plays a very important role in the medium-and long-term trend of grain prices.

Our country has had a bumper harvest for 18 years in a row, and the grain output last year was also very sufficient. From a supply point of view, we are not short of food. In particular, rations, such as wheat and rice, are absolutely safe and well stocked. So there is no reason for food prices to rise sharply from a supply point of view.

But in fact, since 2004, China's grain prices have gone up all the way. On the one hand, there is a continuous bumper harvest, and on the other, food prices are constantly rising. the most important factor here is the price guidance of the government.

Our country is now implementing the lowest purchase price for food rations. The so-called minimum purchase price is an open purchase in this price country, which is the bottom line of the market price. Of course, this refers to the raw grain. In recent years, while there has been a bumper harvest, the country has been constantly raising the minimum purchase price of grain, which is certainly not determined by supply and demand. Here is mainly the country's attention and support for agriculture, rural areas and farmers.

In 2020, China began to raise the minimum purchase price of grain. It has been lowered in the middle, and here it is mainly an issue of food security and national strategy, that is, the country now attaches unprecedented importance to food, especially food rations.

Of course, the cost of grain cultivation has also increased significantly in recent years, whether it is the cost of transferring land, the cost of labor, and so on, so the efficiency of farmers growing grain has declined in recent years, so people's enthusiasm for growing grain is not as high as before.

In order to ensure the planting area of grain and the enthusiasm of farmers to grow grain, it is necessary to ensure reasonable profits in grain cultivation. In addition to increasing subsidies, it is to raise the price of grain moderately.

So on the whole, the country will continue to raise the minimum grain purchase price slightly from 2020 to the present, so that the bottom line of the entire grain price market is also rising.Short-term may be affected by international prices, there are periodic fluctuations, but the overall trend is still stable and rising.Grain, especially food rations, cannot rise by a large margin, because this will have an impact on the living standards of the residents, so it will rise steadily.

In the next step, will the trend of international and domestic grain prices be synchronized?

What is involved here is the issue of import dependence. From the perspective of food rations, I think it should not be synchronized and is relatively independent. Like wheat. The synchronization is mainly soybeans.Because soybeans are almost entirely satisfied by imports, the price dominance of soybeans is internationally.Of course, international prices will be moderately imported through soybeans and spread to other domestic varieties through comparative benefits.For example, if the price of corn rises, wheat can be used instead of corn as feed, and the demand for wheat will increase, thus driving up the price of wheat. But in general, rations should not be synchronized.

What are the possible effects and changes of GM policy on the pattern of planting industry?

It should be said that transgenic is a major industry change in China's seed industry. At present, corn and soybeans are the main food crops.2021 should be said to be a year of great strides in the promotion of genetically modified planting. All laws and regulations that hinder the promotion of genetically modified genes have been revised and supplemented.

Especially in June this year, the National Variety approval Committee announced the standards for the approval of genetically modified corn and soybean varieties. It can be said that all the policies, regulations, operation procedures and operation requirements of GM to the market as a whole are more clear.

At the end of 2022 or early 2023, the genetically modified varieties adapted to the policy may be approved and approved before they can be propagated and planted in large quantities. So this must be a year with major changes.

So how does GM change the industry? There are mainly two transgenic seeds, one is insect-resistant, the other is herbicide resistance.

Insect resistance can save pesticides. In addition to cost savings, fewer pests actually indirectly increase production. Herbicide resistance, the herbicides currently used are not only expensive, but also relatively weak in weeding efficiency. Transgenic is now mainly for glyphosate, glyphosate relative broadcast, long time, low cost. This is also the progress of science and technology.

The production mode and production mode of the whole planting industry will change to a certain extent. Transgenic is an upgrading change for the seed industry, of course, in the process of upgrading, the industry concentration will be tilted to the seed companies with more scientific research strength and the integration of breeding and breeding, and their competitiveness and market share will be moderately enhanced.

What are the investment opportunities in food security?

Food security is also relatively hot recently, and food security corresponds to the food crisis. What is the relationship between food security, food crisis and rising food prices?

We often see reports that the food crisis has led to a rise in food prices. In fact, the meaning of the food crisis is essentially how many people can not afford to buy food. In terms of population and purchasing power, how much food is needed to help. Rising food prices make more people unable to afford food, and then there is a food crisis, which means that more people need help, not just low-income and unrich countries. Therefore, it is the rise in food prices that aggravates the food crisis, not the food crisis that causes food prices to rise.

Food security means that there is enough food to ensure a living.

Speaking from the plate, grain prices are rising steadily on the whole, and from the perspective of the industrial chain, the rise in grain prices is definitely not good for its downstream, including feed and food processing, food manufacturing and other downstream aquaculture industries. Unless it has the ability to pass on costs, there will be some degree of profitability reduction.

What is the impact of rising grain prices on the seed industry? in the A-share market, an important logic of optimistic about the seed plate is the rise in grain prices, because there is no relevant target for grain cultivation, then the seed plate is the beneficiary in the market.

But we have to look at it dialectically. The impact of rising grain prices on the whole seed sector is actually twofold. On the one hand, grain prices rise, farmers' enthusiasm for planting grain increases, grain sown area increases, and seed demand increases. On the other hand, the main business of Chinese seed companies is basically outsourced.The self-cultivated land is all local, and the labor production is all farmers. The model is to contract out self-farming land, how much money per mu to farmers, and then farmers to plant. If grain prices rise, farmers will have new requirements for income and more fees. Therefore, for seed enterprises, on the one hand, the demand increases macroscopically, and on the other hand, its self-planting cost will increase.

"Pig cycle" whether pig prices have entered a reversal cycle, and how to view the speed and extent of the reversal of pig prices?

The biggest change that has occurred in pig farming in the past two years is the epidemic of classical swine fever in Africa. From zero star in November 2008 to full launch in the first half of 2019, resulting in a shortage in the back. Then the industry quickly returns to production capacity until there is excess capacity and then goes to capacity. Since the loss of production capacity in June last year, the judgment of pig price cycle has been the focus of attention in the market.

With regard to the pig farming sector, including pig prices, I think we can also look at this industry from a more macro point of view. First of all, the judgment of pig prices, like grain prices, is also determined by supply and demand. Of course, there is a game between slaughtering and breeding. Because pigs can either press the fence or be sold in advance. We assume that overall consumption is basically stable, and even in the future, with the improvement of living standards, the proportion of consumption may be even less, while the proportion of cattle, sheep and aquatic products will increase. So pig price fluctuations are actually the most sensitive to supply fluctuations.

There are two reasons for this round of fluctuations, one is the national spread of classical swine fever in Africa in 2019. The whole pig production capacity has decreased sharply. When the outbreak led to a reduction in capacity, the capital markets wisely predicted that pig prices would rise in the future. At that time, pork prices were still not high, even at periodic lows, so the market was very smart in terms of investment in cyclical stocks. Then the state took measures to encourage aquaculture, including adjustments in land environmental protection. The data of sows began to pick up quickly from being able to reproduce. By June 2021, the stock of breeding sows has reached more than 46 million, which should be said to be relatively high. At that time, pig prices were also relatively poor, and the industry began to eliminate production capacity. The stock of fertile sows declined for three months in a row, and in April this year, about eight percent of the sows went to more than 41 million in 10 months. After May, the stock of fertile sows no longer continued to decline, and even increased a little.

From the perspective of capital markets, it has always been the logic of capacity loss and the last round of rapid decline in sows, and then soaring pig prices. This logic of expectation is not so obvious under the relevant national policy safeguards, and this expectation may have to be adjusted.

But recently, pig prices have accelerated. Will this trend continue? Whether to enter the main rising wave? How high will it go up? The changes in the stock of breeding sows mentioned above, in fact, do not affect the changes in supply and demand in the current period, because it normally takes 10 months for breeding sows to become commercial pigs. Then a short-term rise should be determined by short-term supply and demand. And in the short term, from the perspective of pork consumption of live pigs, it is not the peak season but the off-season. The rapid rise in prices in the off-season must be special. Then everyone wants the off-season is not weak, so the peak season is more prosperous. According to this logic, pig prices are bound to continue to rise. Then the pig breeding sector, the market will continue to pay attention.

Then why is it rising now? First of all, on the demand side, as I just said, there will be no big growth in the off-season, which must be a phased reduction in supply.Why is the supply really low at this time? One is the conduction effect of the reduction in the number of sows that were able to reproduce last year.Last year, it began to decrease in June, and by January this year, the number of piglets born began to decline. Transmission to the current output of commercial pigs is also the next step.Second, some pigs have been sold ahead of time.The total number of live pigs reached 195 million in the first quarter, which is very high. It shows that before the Spring Festival, everyone predicted that pig prices would fall after that. This has led to a reduction in the supply of pork at this stage.At the same time, the state is collecting and storing.Although the reserves are not large, they also reduce the supply. At the same time, our imports of breeding pigs this year are also very small. From January to May, it was only 680000 tons, compared with more than 1.9 million tons in the same period last year.

In this case, pig farming enterprises and farmers are optimistic about the short term, they will hesitate to sell and press the fence, resulting in less supply. Pig price in such a game, there is only one price a day.

At this stage, it can be said that the game is in the case of reduced fundamentals, leading to a short-term surge in pig prices. After that, no matter whether you press the bar or cherish the sale, you always have to sell it in the end. In the future, as the weather gets cooler, consumption will increase and demand will pull. The number of fertile sows will not pick up until 10 months later. Well, at this stage, there is a shortage of supply. Therefore, pig prices rise in advance, and will continue to rise after moderate finishing in the future. But its rhythm is uneven. When there are a large number of hurdles and sellers, it may also bring some restraint to the real high point. Because the supply itself is not that small.

Do you have any suggestions on the investment in the pig farming sector? Is it still a good time to enter the layout?

In terms of industry fundamentals, the continuous rebound of pig prices and the improvement of profits in the pig farming sector is a deterministic expectation. We are optimistic about the overall pig farming sector in 2022, and the optimistic logic is that pig prices have rebounded and profits have improved. At present, it has almost changed from a loss to a profit for the whole industry. From this point of view, the pig farming sector is still worthy of attention, it is a deterministic expectation.

From the perspective of the secondary market, it is difficult to buy at the lowest point. So our investment strategy is to focus on rising prices and industry profitability. The profitability of the industry will continue to pick up in the second half of the year, which is worthy of continued attention.

Whether the capacity removal of the aquaculture plate is coming to an end, and whether the capacity removal of each subdivision plate is different?

The logic of losing production capacity in the pig farming sector in May was a little lower than expected. What is the production capacity? It can be said from two levels. Pig production capacity includes pig farms and breeding pigs, which is a level. Pig farms are still increasing, these two years scale up, all kinds of capital are involved in pig breeding, the amount of investment and financing is very large. Including 2022, many projects under construction have been completed one after another. And now the pig farms are very modern, including building pig raising, the degree of digital intelligence is very high. These production capacity can not be casually withdrawn, this is an all-round upgrade.These capacity increases at least until the end of this year, so modern pig farms are still increasing.Secondly, many breeding pigs died after the outbreak. In 2020, we imported more than 30,000 breeding pigs, a record high in history, and gradually entered the production link to replace the original three-yuan sows. In terms of the protection of piglets, the whole industry is also upgrading, quality is improving and efficiency is improving.

When we are talking about the loss of production capacity, we are referring to the observable amount of sows that can reproduce. Relatively speaking, the data of the Ministry of Agriculture has the most sample skills and is more authoritative. DisplayAs a whole, after May, the stock of breeding sows has not declined, it can be said that the production capacity is coming to an end. Let's add that the enterprise should take the initiative to reach the end of production capacity.. Because the inefficient and high-cost ones in the past have been eliminated. And the state also has the guarantee for breeding sows, from 37 million to 41 million, which is currently a little above the security line, so less will enter the national regulation line.

But we can see that the country's environmental requirements for the management of pig farming are also improving, and these non-conformities may be the loss of production capacity. To some extent, it also makes room for modernization and scale. So there will be little change in production capacity in the future, then the fluctuation of the whole industry will tend to be stable, and pig prices will not fluctuate as violently as before.Then we should not invest entirely according to the logic of the cycle. It should be seen that many pig breeding enterprises are doing the extension of the industrial chain.In the end, like a foreign food company, the industrial chain will not be so isolated and there are not so many games between each other. At present, some large leading enterprises have also sprung up, and it is also difficult to enter the existing echelon of these leading enterprises in the future. Because pig farming as a whole is a capital-intensive industry, including technology-intensive. In this round of capitalization and large-scale process, it has also achieved a leaping development. In the future, the overall industry concentration will increase, and the fluctuation range of pig prices will be appropriately smooth.

What are the investment opportunities in the pet economy?

From the perspective of agriculture and fishing, the main concern is pet food. Pet food is essentially feed. Pet feed contains a little more raw meat, so fluctuations in meat prices have a great impact on it.

Chinese pet food in the past two years, the market regards it as a very good track. There is no lack of capital to join in, many companies continue to enter the capital market, behind there are several companies to pass the IPO.

At present, many of the main businesses of these companies are to do foreign contract manufacturing and then export. This year, because the epidemic in foreign countries is relatively better, including the pressure on RMB appreciation is not so strong, exports increased in the first half of the year.

Well, for domestic sales, this year's epidemic may have an impact on this pet food company, but pet food itself is a necessity, and after the end of the epidemic, domestic stocks will also be replenished. Online sales of pets were also good at 618.

As far as the whole industry is concerned, the competition is quite fierce. One is that foreign well-known brand enterprises pursue profits at home. It's a high-end product. The second category is the original export OEM found that international growth is limited, while the domestic market is still leaderless, have returned to the domestic market. Of course, there is also capital-driven, which is completely optimistic about this track. Marketing-oriented, OEM looking for people to create brands.

Well, at present, the biggest feature is that, with the support of capital, it is often regardless of cost at this stage, especially now the concentration of the online model is increased.

At present, there are more and more competitors and franchisees in the domestic market as a whole, but the profit is not very good, mainly in the early scuffle, and some brand enterprises will gradually rise in the future. At present, no brand has formed a very big advantage. Consumers will also consider cost-effective.

So the industry is developing.The overall number of pets is still increasing. The cognitive structure of consumers has also changed. But competition is also intensifying. There is no absolute faucet at present. However, these listed companies, including those originally supported by overseas export business, have a relatively good industrial base. I think it will have a more obvious advantage in the competition in the future. For those marketing brands built entirely on capital, if the follow-up funds are not sustainable, they will withdraw in the future.。

There is no denying that this is a good track, it has a huge consumption and market space, but now the competition is also fierce.

In addition to the pet sector, which subdivision areas are optimistic about the agriculture, forestry, animal husbandry and fishing industry in the second half of the year?

The strategy of the agricultural sector in the second half of the year continues the main line of the first half of the year, that is, looking for prices to rise or remain high, or difficult to fall, that is, the main line of price growth driven by rising prices.Food prices in major China will continue to rise steadily, pig prices will continue to rise, and chicken prices will also pick up after they have been depressed for a long time. The related sub-industries corresponding to the main line of price rise are still worthy of attention.Including grain cultivation, pig breeding, yellow feather broiler breeding and so on. And eel farming in farming.After rising in an all-round way in recent years, prices will also recover due to a decline in the epidemic.

In addition, the seed industry can also focus on the promotion and planting process of genetically modified seeds; animal vaccines can pay attention to the research and development process of the new African classical swine fever vaccine, which have a significant impact on the industry, which also contains investment opportunities.

What is the sustainability of the agricultural sector in the second half of the year? What is the logic of the upstream?

The prosperity of the agricultural sector in the second half of the year has attracted a lot of attention, mainly because the changes in the fundamentals of the industry continue to pick up. Pig prices and grain prices continue to rise, bringing the whole industry from original losses to profits, from less profits to more profits. The recovery of the industry is the main concern of the whole agricultural sector.

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