Tai Ping Yang·2025-03-17 00:53Investment Rating - The industry investment rating is "Positive" [54] Core Views - The report highlights that trade tariffs are driving up grain prices, while prices for pigs, chickens, and raw milk remain low, putting dual pressure on the profitability of the breeding industry, thus enhancing the motivation for capacity reduction. It suggests focusing on dairy and pig breeding sectors that are expected to benefit from the anticipated cyclical reversal [5][19] Summary by Sections Market Review - The agricultural sector outperformed the broader market, with the Shenwan Agricultural Index rising by 2.84%, compared to a 1.39% increase in the Shanghai Composite Index and a 1.24% increase in the Shenzhen Component Index. All six secondary industry indices within agriculture saw gains, with fisheries and animal health leading the way [4][24] Breeding Industry Chain 1. Pigs: - The average price of pigs was 14.57 CNY/kg, up by 0.07 CNY from the previous week. The price is expected to remain strong due to increased demand from the retail sector as schools reopen. The supply side is also expected to increase gradually [5][19][20] - As of January 2025, the number of breeding sows was 40.62 million, a month-on-month decrease of 0.4%. The average price for piglets was 40.03 CNY/kg, up by 0.41 CNY from the previous week. The report indicates that the industry is at a historical low in terms of valuation, presenting long-term investment opportunities [20][14] 2. Chickens: - The average price for chicken chicks was 2.94 CNY/bird, up by 0.24 CNY, while the price for white feather broilers was 3.55 CNY/kg, up by 0.28 CNY. The report anticipates a slight rebound in chicken prices due to increased demand as students return to school [19][21] - The industry is still experiencing high capacity levels, necessitating further capacity reduction [21] 3. Yellow Chickens: - The report notes that the price for yellow chickens is expected to rebound in the medium term due to tight supply and weak demand. The average price for yellow chickens was 10.37 CNY/kg, down by 1.41 CNY from the previous month [21][22] 4. Animal Health: - The animal health industry is showing signs of recovery from its bottom, with expectations for increased sales of health products as pig inventories rise. The report highlights the potential for growth in the sector, particularly with the introduction of new vaccines [10][22] Planting Industry Chain 1. Seed Industry: - The report emphasizes the strategic importance of the seed industry, noting that the environment for development is continuously improving. The performance of leading companies is expected to strengthen as genetically modified corn and soybeans are further commercialized [23] 2. Planting: - The report suggests that grain prices are likely to continue rising due to trade tariffs. The average price for corn was 2,251 CNY/ton, up by 11 CNY, while the average price for wheat was 2,425 CNY/ton, down by 3 CNY. The report indicates that the impact of tariffs on grain imports and supply is limited, but it positively affects market sentiment [23][12]