The "pig cycle" is expected to heat up, and the livestock breeding ETF (516670) rose strongly in the afternoon
On the afternoon of December 11, 2023, pork stocks strengthened again, superstar agriculture and animal husbandry rose more than 4% to hit a record high, and Tiankang Biological, Tang Renshen, and New Hope collectively strengthened. As of 14:06, the "pig cycle" layout weapon - animal husbandry ETF (516670) rose 1.24% to 0.734 yuan, with an intraday turnover of nearly 30 million yuan.
Image Credit: Snowball
On the news side, according to the data of relevant state departments, as of December 6, the national pig price was 14.63 yuan/kg, down 1.35% from November 29, and the pig grain price was 5.50, up 0.18% from November 29.
Source: Wind
It is worth noting that hog futures prices have rebounded significantly recently after hitting the bottom of the stage. Market data shows that the main domestic hog futures contract has risen sharply in two of the last three trading days, of which the contract rose 4.81% on December 8 to 14,395 yuan / ton, up more than 1,000 yuan per ton from the low level on December 6.
The inflection point of the "pig cycle" is expected to heat up.
The latest view of Industrial Securities points out that according to the slaughter plan, the number of live pigs slaughtered by listed companies will still maintain growth in 2024. At the same time, with the decline in raw material prices and the improvement of aquaculture production efficiency, there is still room for further decline in the breeding cost of listed companies in 2024. From the perspective of valuation, after the continuous adjustment of the sector in 2023, the average market value of most breeding enterprises has been within the 10% historical quantile, and the layout of the pig sector in the current position has a high margin of safety.
Guojin Securities said in the 2024 annual strategy research report that the number of live pigs slaughtered in 2023 will continue to grow, the state of oversupply in the industry has not changed, and the annual breeding profit is expected to be negative. From a cyclical point of view, the industry has entered a downward cycle since the second half of 2021, and has been losing money for 3 consecutive years. Looking forward to 2024, it is expected that the supply and demand pattern will be difficult to improve in the first half of the year, and the price of live pigs will remain sluggish.
The CSI Animal Husbandry Index (930707.CSI) tracked by the Animal Husbandry ETF (516670) selects the stocks of listed companies involved in livestock and poultry feed, livestock and poultry drugs, and livestock and poultry breeding businesses from Shanghai and Shenzhen A-shares as sample stocks to reflect the overall performance of the stocks of listed companies related to animal husbandry. At present, there are 35 constituent stocks in the index, which fully cover the entire industry chain of animal husbandry and breeding, and focus on the layout of the core track of pig breeding. According to historical performance, the animal husbandry sector has shown obvious cyclicality for a long time according to the relationship between supply and demand, and there is a strong correlation between the overall and pig prices.
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