The agricultural sector performed better than the CSI 300 index this week, with the Agriculture, Forestry, Animal Husbandry, and Fishery Index rising by 0.25%, ranking ninth among the SW-level industries during the period. Meanwhile, the CSI 300 index fell by 0.88%. Among the sub-industries, fisheries (+1.90%) and feed (+1.44%) were the leading gainers, while Animal Health (-2.82%) and livestock farming (-0.43%) underperformed. In terms of individual stocks, Anhui Huilong Agricultural Means of Production, Hainan Shennong Technology, and Baolingbao Biology were the top gainers.

The analysis from China Galaxy Securities states that as of July 5th, the PB ratio of the hog farming sector was 3.40 times, which remained unchanged compared to the previous week and was in a relatively low historical range. Currently, hog prices are already in an upward trend, while the cost center is moving down. The elasticity of breeding profits is expected to exceed expectations. It is recommended to actively lay out the hog farming sector during a short-term pullback. Additionally, with the continuous cost reductions for excellent pig companies, this round of breeding profits is expected to exceed market expectations. It is worth noting that various factors, such as low production capacity, may drive up yellow chicken prices, and the cost advantages of leading companies combined with price improvements give them a competitive advantage. Meanwhile, the broiler industry's production capacity is currently adjusting.

As of July 5th, the PB ratio of the hog farming sector was 3.40 times, which remained unchanged compared to the previous week and was in a relatively low historical range. According to Boya Hexun, as of July 5th, the price of live hogs was 18.51 yuan/kg, up 4.69% from the previous week, while the price of 15kg piglets was 49.79 yuan/kg, down 3.84% from the previous week. According to Yongyi Consulting, the weekly average weight of commodity pigs was 125.39kg, down by 0.25% from the previous week. As of July 5th, the profit of breeding a self-bred pig was 328.42 yuan/head, and the weekly profit expansion increased by 43.22 yuan/head. From the perspective of pig sales, China's new piglet population from December 2023 to May 2024 decreased by 7% year-on-year, which means that the subsequent piglet sales will also decrease year-on-year. Currently, hog prices are already in an upward trend, while the cost center is moving down. The elasticity of breeding profits is expected to exceed expectations. It is recommended to actively lay out the hog farming sector during a short-term pullback. Additionally, with the continuous cost reductions for excellent pig companies, this round of breeding profits is expected to exceed market expectations. Key attention should be given to Wens Foodstuff Group, Muyuan Foods, and Tecon Biology Co., Ltd.

As of July 5th, the PB ratio of the broiler farming sector was 1.64 times, down 4.65% from the previous week and in a historical low range. Factors such as low production capacity may drive up yellow chicken prices, and the cost advantages of leading companies combined with price improvements give them a competitive advantage. It is recommended to pay attention to Jiangsu Lihua Animal Husbandry. According to Boya Hexun, as of July 5th, the average price of live chickens was 3.57 yuan/jin, down 2.33% from the previous week, while the price of chicks was 1.88 yuan/fowl, down 10.05% from the previous week. The breeding profitability of white feather chickens was -3.08 yuan/bird, and the weekly loss expansion was 0.3 yuan/bird. As of June 23rd, the inventory of breeding parent stock was 21.657 million sets, a week-on-week decrease of 0.79%, while the sales volume of breeding parent stock was 1.6197 million sets, a week-on-week increase of 3.09%. It is worth focusing on the sector's adjustments to production capacity.

According to Huiyi.com, as of July 5th, the spot price of corn was 2,481 yuan/ton, up 0.03% from the previous week, while the spot price of wheat was 2,508 yuan/ton, up 0.10% from the previous week. The spot price of soybean meal was 3,288 yuan/ton, a decrease of 0.90% weekly. Boya Hexun reports that on July 5th, the spot price of fishmeal was 12,425 yuan/ton, remaining unchanged from the previous week. The average price of chicken feed was 3.53 yuan/kg on June 26th; the average price of fattening pig feed was 3.54 yuan/kg on June 27th, maintaining a downward trend since September 2023. In terms of aquatic feed, it is worth paying attention to the trend of aquatic product prices. When considering individual stocks, focus on the management capability of the industry chain and research and development strength. It is recommended to pay attention to Guangdong Haid Group and Yuehai Feed.

Risk warning

There are risks of livestock prices not meeting expectations, risks of animal diseases, risks of fluctuating raw material prices, policy risks, and risks of natural disasters.