"Pig Mao" Muyuan shares rose by more than 1%, superstar agriculture and animal husbandry, Lihua shares rose in a straight line, and animal husbandry ETF (516670) rose in volume
On December 22, 2023, pork stocks moved repeatedly in the intraday, and rose again near midday, as of the time of writing, "Pig Mao" Muyuan shares rose 1.37%, and Lihua shares, superstar agriculture and animal husbandry, and Pleco rose more than 2%. Animal Husbandry ETF (516670), a sharp tool for the layout of the "pig cycle", rose 0.57% in real time, with an intraday turnover of more than 13 million, and the turnover was amplified.
Image Credit: Snowball
On the news side, according to the data of relevant departments, at the end of October 2023, the national breeding sow herd was 42.1 million, a year-on-year increase of -3.86%, and a month-on-month decrease of -0.71%, a year-on-year decline, but still 1.1 million heads higher than the normal holdings. At the end of September 2023, the national pig inventory was 442 million heads, +1.64% quarter-on-quarter and -0.37% year-on-year from the end of the second quarter. On the whole, the production capacity of pigs in mainland China is still at a relatively high historical level, and the production capacity of fertile sows has not been reflected to the pig slaughter level.
Data source: Zhongyuan Securities
From the perspective of historical trends, the price of pork has an obvious inverse relationship with the slaughter data of fertile sows, and the degree of de-breeding of fertile sows has become the key to the reversal of pig prices.
Data source: Wind, 2013.11-2023.10
Shanxi Securities recently emphasized again that it is recommended to lay out pig breeding during the current third "loss bottom" period. Shanxi Securities expects that in 2024, there may be the fourth "loss bottom" of this cycle, which is the first time since 2006 that there will be four "loss bottoms" cycle, and the cycle is expected to gradually enter the end. The U.S. pig industry still has an obvious pig cycle in the period of high scale, and the current scale of the mainland pig industry is still significantly lower than that of the United States, and the mainland pig price will still show cyclical fluctuations in the future. Due to the existence of industry behaviors such as secondary fattening, it is inclined to believe that the high point of the future pig cycle is more likely to be higher than the normal cycle high point before the occurrence of "African swine fever" in 2018.
The latest view of China Merchants Securities pointed out that under the influence of large-scale debt expansion & long-term continuous losses, the cash flow pressure of the industry has been gradually exposed, and the pressure on the supply of live pigs in the first half of 2024 is relatively large, and pig prices may still be under pressure, which is expected to accelerate the production capacity of sows and strengthen the expectation of pig price reversal in the second half of 2024.
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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The performance of the CSI Animal Husbandry Index in the past five years was -17.16% (2018), 75.7% (2019), 13.49% (2020), 5.93% (2021), and -13.21% (2022), respectively. The CSI Livestock Index is compiled and published by China Securities Index Company Limited. The Compiler of the Index will take all necessary measures to ensure the accuracy of the Index, but does not guarantee this and will not be liable to any person for any errors in the Index. Past performance of the Index is not indicative of future performance and does not constitute a guarantee of investment income or any investment advice. Indices operate for a relatively short period of time and do not reflect all stages of market development.