The release of hog sales data in July has shown that the rebound of pork prices has led to the recovery of the industry.

According to statistics by reporters, nearly 90% of the 17 A-share listed hog farming companies have achieved year-on-year growth in revenue. Among them, Muyuan Foods achieved monthly revenue exceeding 10 billion yuan, leading the industry, while Hunan Zhenghong Science and Technology was at the bottom of the list due to a sharp contraction in production capacity.

Insiders pointed out that the fluctuation of hog prices in the past five years has been significant, with many historic turning points. As a result, some small and medium-sized hog breeders have quit, while the proportion of large-scale breeding has continued to rise.

Under the current situation, large-scale enterprises with the ability to expand are increasing their breeding capacity of sows in order to seize future market share.

According to a research report released by Haitong Securities, hog prices can be determined based on the year-on-year growth rate of breeding sows or the predicted year-on-year growth rate of hog supply.

The rise in pork price from the beginning of the year to now is mainly driven by supply contraction.

In January, the historical peak of slaughter volume was reached, but from March to April, there was a significant year-on-year decrease, indicating a clear supply contraction.

In the future, the winter epidemic will still be serious at the end of 2023, and the production cycle will be fully reflected this year.

The year-on-year decline in breeding sows for the first 10 months of each month has increased month by month, and it will exceed 5% in September. According to historical experience, this means that the year-on-year increase in hog prices will reach 50%.

Hog farming-related companies:

Dekang Agriculture and Animal Husbandry (02419): The group expects to achieve a profit of approximately RMB 0.313-0.413 billion and a net profit of approximately RMB 1.713-1.813 billion before the fair value adjustment of biological assets in the first half of 2024 (of which approximately RMB 1.4 billion is due to the rise in market prices of Chinese commodity pigs in June 2024), while in the same period of 2023, it had a loss of approximately RMB 1.118 billion and a net loss of approximately RMB 2.353 billion. The expected turnaround from loss to profit is mainly due to the increase in sales prices of commodity pigs and yellow feathered broiler chickens in the first half of 2024 compared with the same period last year, and the company's continued efforts in production management and cost control have led to a decrease in costs for commodity pigs and yellow feathered broiler chickens in the first half of 2024 compared with the same period last year.

Cofco Joycome (01610): On August 9th, it was announced on the Hong Kong Stock Exchange that the number of pigs sold in July was 0.313 million, and the sales volume of fresh pork was 0.0206 million tons. The number of pigs sold from January to July was 1.897 million.

Overseas hog farming companies: WH Group (00288).