Huafu Securities: After the rise and fall of pork prices, focus on the demand during the Double Festival in late September

According to the Zhitong Finance APP, Huafu Securities released a research report stating that the output plans of large-scale enterprises in August increased month-on-month, and after the output rhythm recovered, prices came under pressure and fell. On September 5, the national average price of live pigs was 13.79 yuan/kg, an increase of 0.17 yuan/kg week-on-week. In August, the month-on-month growth rate of the three-party caliber for breeding sows narrowed/turned negative, indicating that the effects of policy capacity control may gradually become apparent. In the short term, the output of sample enterprises from Steel Union/Zhuochuang/Yongyi in September is expected to increase by 1.29%/4.11%/3.92% month-on-month, with supply pressure increasing month-on-month. As school stocking ends, pig prices may still be under pressure, with attention on the demand boost from the Mid-Autumn Festival and National Day stocking in late September.

The main viewpoints of Huafu Securities are as follows:

Pig Farming: After a rise in pig prices, attention shifts to demand in late September

This week, pig prices showed a trend of rising first and then falling. At the beginning of the week, driven by the concentrated stocking for the start of school, the demand for catering and canteen purchases warmed up, while the output rhythm from the farming side tightened, jointly supporting a rebound in pig prices. However, the output plans of large-scale enterprises in August increased month-on-month, and after the output rhythm recovered, prices came under pressure and fell. On September 5, the national average price of live pigs was 13.79 yuan/kg, an increase of 0.17 yuan/kg week-on-week.

This week, the slaughter volume of slaughterhouses significantly rebounded. With the stocking for the start of school, the slaughter volume of slaughterhouses rose rapidly this week. The average daily slaughter volume of sample slaughterhouses this week was 149,100 heads, an increase of 5.30% week-on-week. In terms of frozen products, the sales speed of frozen products from slaughterhouses was slow, leading to some products needing to be passively stored, and the frozen product inventory rate continued to increase slightly. As of the week of September 4, the industry frozen product inventory rate was 17.49%, an increase of 0.11 percentage points week-on-week.

This week, the average weight of live pig output slightly increased. As temperatures dropped, the overall output enthusiasm for large pigs from the farming side was relatively strong, leading to a slight rebound in average output weight. As of the week of September 4, the average weight of live pig output was 128.23 kg (an increase of 0.40 kg week-on-week), with group farms averaging 123.61 kg (an increase of 0.09 kg week-on-week) and individual farmers averaging 143.75 kg (an increase of 0.49 kg week-on-week).

In the short term, the output of sample enterprises from Steel Union/Zhuochuang/Yongyi in September is expected to increase by 1.29%/4.11%/3.92% month-on-month, with supply pressure increasing month-on-month. As school stocking ends, pig prices may still be under pressure, with attention on the demand boost from the Mid-Autumn Festival and National Day stocking in late September. In the long term, on July 23, the Ministry of Agriculture and Rural Affairs held a symposium to promote the high-quality development of the pig industry, emphasizing the "strict implementation of capacity control measures," including the reasonable elimination of breeding sows, appropriate reduction of breeding sow stocks, reduction of secondary fattening, control of the slaughter weight of fat pigs, strict control of new capacity, and severe punishment for illegal slaughter and quarantine practices. Recent policies have repeatedly emphasized capacity control, which is expected to accelerate the clearance of inefficient capacity in the industry and promote a long-term upward shift in the price center of pigs, with low-cost, high-quality pig enterprises gaining excess returns.

The three-party breeding sow data for August has been released, showing that in August, Zhuochuang, Steel Union, and Yongyi reported month-on-month changes of -1.11%, -0.80%, and +0.07%, respectively, compared to last month’s changes of -1.36%, 0.00%, and +0.52%. The month-on-month growth rate of the three-party breeding sow data in August narrowed/turned negative, indicating that the effects of policy capacity control may gradually become apparent. It is recommended to pay attention to Muyuan Foods (002714.SZ), Dekang Agriculture (02419), WENS (300498.SZ), LESHAN GIANTSTAR FARMING&HUSBANDRY (603477.SH), and Shennong Group (605296.SH) Poultry Sector

Broilers: Prices retreat from high levels. Under high inventory of cut-up products, the price of live broilers has slightly decreased. The breeding sector is increasingly resistant to high-priced chicks, leading to more negotiations on chick prices, which have also declined. On August 29, the industry price for white feather broilers was 7.33 yuan/kg, unchanged week-on-week; the industry price for broiler chicks was 3.61 yuan/chick, up 0.03 yuan/chick week-on-week; the price of chicken products was 8.70 yuan/kg, down 0.05 yuan/kg week-on-week. Looking ahead, the current overseas avian influenza epidemic continues to spread, with France easing import restrictions while the U.S. and New Zealand still have import interruptions, which may further shrink upstream capacity for broilers. Attention should be paid to the sustainability of import restrictions. It is recommended to focus on Yisheng (002458.SZ), Shennong Development (002299.SZ), and Wellhope (603609.SH).

Layer Chickens: School starts & Mid-Autumn Festival stocking, egg prices slightly rebound. From September 1 to 5, the average price of eggs was 6.53 yuan/kg, up 0.02 yuan/kg week-on-week. On September 5, the price of layer chicks was 3.00 yuan/chick, unchanged week-on-week. Currently, the overseas avian influenza epidemic continues to spread, making it more difficult to import chicks from the U.S., and the supply gap for high-quality chicks may persist, keeping chick prices high. It is recommended to focus on XMGFGS (300967.SZ).

Agricultural Products: Soybean meal futures and spot prices fluctuate within a range this week.

On the futures side, affected by U.S.-China trade tariff policies, imports of soybeans continue to be primarily sourced from South America. This week, the CNF discount for Brazilian soybeans strengthened again, raising import costs and supporting distant contracts. On September 5, the soybean meal 2601 contract closed at 3067 yuan/ton, up 12 yuan/ton week-on-week. On the spot side, oil mills, facing high inventories, have increased their purchasing efforts, leading to continued fluctuations in short-term soybean meal spot prices. On September 5, the spot price of soybean meal was 3084 yuan/ton, down 18 yuan/ton week-on-week. Attention should be paid to U.S. soybean weather conditions, changes in U.S.-China trade policies, and the September USDA supply and demand report. It is recommended to focus on soybean meal ETFs.

Risk Warning

Risks include the occurrence of animal diseases, fluctuations in commodity prices, and natural disasters