The pig industry has finally ushered in a clear sign of recovery.
According to monitoring by the Ministry of Agriculture and Rural Affairs, in the 3rd week of April, the average price of pigs nationwide was 15.34 yuan/kg, up 6.8% from the previous year.
Judging from the April sales data recently disclosed by major listed pig companies, the average sales price of commercial pigs has been on an upward channel since December 2023, and the industry is returning to the breeding break-even line.
At the same time, the A-share pork sector also experienced a rise. The stock prices of Shennong Group and Huatong Co., Ltd. reached 74% and 46% respectively in the past half month, and the stock prices of companies such as Muyuan Co., Ltd. and Wen's Co., Ltd. also continued to challenge new highs.
As pig prices continue to rise, market discussions about inflection points in the pig cycle continue to rise.
There are opinions that along with changes in the pace and extent of pig production capacity removal, the pig cycle is nearing an inflection point; there are also opinions that breeding efficiency is an indicator that cannot be ignored, and the actual supply in the market may be higher than expected.
Although there are still disputes in the industry, “pig prices are likely to rise in 2024” has become an industry consensus.
Some leading companies said that pig prices will maintain an overall upward trend this year, and the pig industry may be in a state of low profit for some time to come.
According to research estimates by Open Source Securities, the industry's pig supply is expected to shrink sharply after August 2024, and the dual drive situation between supply and demand will gradually become established. May-June is an important entry point for secondary education, and pig prices may gradually enter an accelerated upward phase.
Pig breeding related enterprises:
COFCO Jiajiakang (01610): COFCO Jiajiakang is betting on a rebound in pig prices to buck the trend and expand production. On April 18, COFCO Jiajiakang officially started construction of the 662,400 green and healthy pig breeding project in Taonan City, Jilin Province. The total investment of the project is about 10 billion yuan, and the entire green ecological pig breeding industry chain project of 3 million heads will be launched in installments. The first phase of the project will invest a total of 2,014 billion yuan to build a breeding base with 662,400 pigs per year and supporting ancillary facilities.
Wanzhou International (00288): Wanzhou International accounts for a high proportion of overseas business. CICC pointed out that Wanzhou's profit performance in the first quarter of fiscal year 2024 beat market expectations, mainly due to a marked decrease in losses in the US pork business. Revenue for the period fell 8.3% year on year; operating profit increased 37.3% year on year; core net profit to mother increased 73% year on year. Among them, the operating profit of the Chinese market fell 10.4% year over year. As for operating profit in the US and European markets, the year-on-year increase was 208.1% and 156.5%.