Industry Investment Rating - The investment rating for the agricultural, forestry, animal husbandry, and fishery industry is "Outperform the Market" [1] Core Viewpoints - The agricultural sector has shown weak performance despite a general market uptrend, with the agricultural, forestry, animal husbandry, and fishery index declining by 0.14%, ranking 21st among 31 primary industries [11][12] - The report highlights a significant decline in pig prices due to weak demand and increased supply, with expectations of seasonal price fluctuations in the second half of 2025 [5][15] - The white feather chicken sector is experiencing price stabilization but remains deeply unprofitable, with a notable decrease in the number of breeding stock updated in the first half of 2025 [26][30] Summary by Sections 1. Market Overview - The agricultural, forestry, animal husbandry, and fishery index decreased by 0.14%, while the Shanghai and Shenzhen 300 indices increased by 1.09% and 0.69%, respectively [11] - The animal protection sector rebounded, but major sectors like pigs and chickens faced adjustments [12] 2. Livestock Industry Tracking 2.1 Pigs: Weak Demand and Slowing Production Growth - As of July 20, the average price of live pigs was 14.26 yuan/kg, down 0.26 yuan/kg from the previous week, influenced by low consumer demand and high temperatures [5][15] - The average weight of pigs at market was 128.83 kg, a decrease of 0.2 kg from the previous week, indicating a slowdown in weight gain [15] - The report anticipates a seasonal price increase during the peak consumption months of July and August, but significant pressure on prices is expected in the fourth quarter due to increased supply [15][18] 2.2 White Feather Chicken: Price Stabilization and Deep Losses - As of July 18, the price of white feather chicken chicks was 1.50 yuan/chick, showing a slight rebound, while the average price of meat chickens remained at 3.20 yuan/jin [26] - The first half of 2025 saw a 29.62% year-on-year decline in the number of breeding stock updated, raising concerns about future supply [26] - The industry is currently well-supplied, but uncertainties regarding imports due to avian influenza outbreaks pose risks and opportunities [26] 3. Crop Industry Tracking - Sugar prices slightly decreased to 6080 yuan/ton, while soybean prices increased by 1.1% to 3935 yuan/ton [30] - Cotton prices saw a minor increase to 15366 yuan/ton, and corn prices slightly dropped to 2375 yuan/ton [30]

Summary of Key Points from the Conference Call Industry Overview - The conference call discusses the poultry industry, specifically focusing on the breeding of white-feathered chickens and the impact of avian influenza on breeding stock updates and pricing trends [1][2]. Core Insights and Arguments 1. **Decline in Breeding Stock Updates** - In April 2025, the domestic breeding stock updates decreased by 29% year-on-year, with a total of 12.4 million sets updated. This decline is attributed to the suspension of imports from the U.S. and New Zealand due to outbreaks of highly pathogenic avian influenza [1][2]. - The total breeding stock updates from January to April 2025 were only 308,000 sets, representing a 44% year-on-year decline, with less than 28% of these coming from overseas sources, primarily France [1][2]. 2. **Impact of Avian Influenza on Imports** - The only source for the domestic breeding stock currently is France, which has not exported to China for nearly a decade due to previous avian influenza outbreaks. This situation, combined with global avian influenza concerns and U.S. tariff expectations, is expected to lead to a decrease in total breeding stock updates and changes in breed structure for the year [2]. 3. **Decrease in Parent Stock Inventory** - The inventory of parent stock chickens has also decreased, with a 20.1% quarter-on-quarter decline in Q1 2025 and a 9.8% year-on-year decline. By April 2025, the inventory continued to drop by 4.9% quarter-on-quarter and 25.5% year-on-year [2]. 4. **Price Increase for Parent Stock** - The average price of parent stock chicken chicks increased by approximately 10% in May compared to April, reflecting the tightening supply and increased demand [3]. 5. **Market Dynamics and Future Outlook** - The industry has been in a bottoming phase for three years, with an increasing willingness to reduce production capacity. The ongoing disruptions in overseas imports necessitate a focus on the quantity and structure of breeding stock updates, suggesting a potential market reversal [3]. - Companies like San Nong Development, Yisheng Livestock, and Minhe Holdings are highlighted as key players benefiting from these market dynamics, with expectations of improved profitability due to rising prices and increased domestic breeding efforts [3]. Additional Important Points - The call emphasizes the importance of domestic breeding and the potential for local breeds to gain market share as overseas imports remain constrained. This shift could lead to a more resilient poultry industry in the long term [3].