Core Viewpoint - The egg market is experiencing increased supply pressure and weak demand, leading to further declines in egg and old hen prices, pushing the industry into a loss-making zone [1] Group 1: Market Supply and Demand - In Q4 2025, the average price of eggs was 2.96 yuan per jin, down 5.73% from Q3, while the average price of old hens fell to 4.03 yuan per jin, a decrease of 18.75% [1] - The average inventory of laying hens was approximately 1.356 billion, a decrease of 0.51% quarter-on-quarter, although still at historically high levels [1][5] - Sales volume in consumption areas decreased by 10.56% quarter-on-quarter, indicating weakened terminal consumption and deepening supply-demand contradictions [1] Group 2: Cost and Profitability - The cost of producing eggs in Q4 was 2.95 yuan per jin, a decrease of 2.64% from Q3, primarily due to falling feed prices [3] - Despite lower production costs, the average gross profit per jin of eggs fell to -0.19 yuan, worsening by 0.10 yuan compared to Q3, indicating widespread losses in the breeding sector [3][6] Group 3: Future Outlook - For Q1 2026, the egg market is expected to see a rebalancing phase with supply pressure easing and demand initially increasing before declining [1][7] - The price of eggs is projected to rise initially in January, potentially reaching 3.30-3.50 yuan per jin, before declining again in February due to reduced demand [7]

Core Viewpoint - The recent recovery in the egg futures and spot market is driven by factors such as oversold conditions, seasonal stocking demand, and the exit of short-sellers, although supply pressure remains significant due to ongoing losses in egg production [1][2]. Group 1: Market Performance - As of September 5, the main egg futures contract closed at 2964 yuan per 500 kg, reflecting a nearly 2% increase from the low point on September 2 [1]. - The average price of eggs in China's agricultural wholesale market was 7.73 yuan per kg on September 5, up 1.84% from 7.59 yuan per kg on September 2 [2]. Group 2: Supply and Demand Dynamics - The egg market is experiencing a complex supply-demand dynamic, with producers reluctant to cull older hens due to ongoing losses, which keeps supply pressure high [1][3]. - Seasonal demand typically peaks in the third quarter, but this year, the market has not seen the expected price increases during this period due to various factors, including high temperatures affecting egg quality [4]. Group 3: Production Insights - The number of hens being culled has been limited, with producers maintaining a cautious approach, although there is an expectation that culling will increase as the Mid-Autumn Festival approaches [3][6]. - The egg production cycle indicates that the number of hens entering the culling phase in September will increase, potentially leading to a gradual reduction in production capacity [3][6]. Group 4: Profitability and Market Sentiment - The prolonged low prices have resulted in significant losses for egg producers, with losses nearing 0.30 yuan per kg during July and August [4][5]. - The market sentiment is shifting from a focus on maintaining production to selective capacity reduction, as producers face ongoing financial pressures [5][6]. Group 5: Future Outlook - There is a potential for slight price increases in September due to pre-festival stocking and increased demand from schools, although overall price recovery may be limited by high production capacity [6]. - The egg market is expected to see a gradual decline in inventory levels post-third quarter, but the pace of this decline may be slow [6].

Core Viewpoint - The chicken egg supply is on the rise, leading to a decrease in egg prices, with expectations that the supply pressure may ease in the future, but prices are still projected to be lower than in previous years due to a high supply base [1][3][4]. Group 1: Supply and Price Dynamics - The average monthly price of eggs has a moderate negative correlation with the number of laying hens, indicating that as the supply increases, prices tend to decrease [1]. - As of August 22, the average monthly prices for July and August were 2.89 yuan per jin and 3.04 yuan per jin, reflecting year-on-year declines of 33.41% and 36% respectively [1]. - The supply of eggs is expected to decrease after August, as the number of older hens suitable for culling is projected to decline, which may reduce the pressure on egg prices [4]. Group 2: Profitability and Cost Trends - The prolonged period of losses in egg production is expected to lead to a turning point in capacity, with slight alleviation of supply pressure anticipated [3]. - The average feed cost per jin of eggs as of August 22 was 3.04 yuan, with a month-on-month increase of 0.33% and a year-on-year increase of 1.33%, while the profit per jin of eggs was -0.20 yuan, indicating a worsening profitability situation [3]. - Despite the seasonal demand increase in the third quarter, the losses in egg production are expected to continue, leading to a cautious approach in expanding production capacity [3]. Group 3: Market Adjustments and Future Outlook - The industry is experiencing a gradual increase in the number of laying hens, but the pace of capacity reduction is expected to be slow due to the growth of large-scale enterprises [4]. - The price gap between small and large eggs may begin to correct positively starting in October, potentially supporting the prices of large eggs [4]. - Overall, even with a projected decline in the number of laying hens, the total supply remains high, making it difficult for egg prices to receive substantial support in the latter half of the third quarter [4].

Report Industry Investment Rating - No relevant information provided Core Viewpoints - Since 2013, the egg market has gone through three major cycles, and currently, the egg - chicken farming profit has turned negative again. This year, the average monthly egg - chicken farming profit from May to June turned negative, and the loss time is not long enough to drive a large - scale and rapid culling of chickens. Before the farming end completes the substantial capacity reduction, the price is expected to remain at a low level. If the seasonal consumption peak drives the price to rise rapidly, the capacity - reduction process and supply pressure will be postponed [4][5] - In 2020, when the price was below 3 yuan/jin for more than half a year, it was only after the second price low appeared and persisted that the culling age of chickens dropped below 500 days and the capacity was basically cleared. This year, the first price low may appear in early July, and as of June 30, the culling age of chickens was still 508 days. The second price low may be offset by the consumption peak, and the culling age of chickens may remain high. The capacity - reduction process may occur in the fourth quarter of this year or the first quarter of next year [2][7][8] Summary by Directory 1. Analyzing Egg - Chicken Supply from the Farming Profit Cycle - From 2013 to 2017, due to the epidemic, the egg - chicken inventory decreased and the price increased. Then, driven by high profits, the supply increased and the price fell. In 2017, the industry completed capacity reduction due to the epidemic [4] - From 2017 to 2020, after the supply decreased, the egg price recovered. The African swine fever increased the supply of poultry meat and eggs, and the high - prosperity cycle of eggs was extended. In late 2019, the egg supply pressure emerged and the price dropped [4] - From 2020 to the present, after the capacity reduction, the egg price recovered in 2021. In 2022, the egg price remained at an average level. In 2023, the egg price fluctuated widely. In 2024, the egg price first decreased and then increased, and the capacity expanded. Since the fourth quarter of 2024, the egg price has been falling [5] - This year, from May to June, the average monthly egg - chicken farming profit turned negative. The average loss per jin of eggs in the second quarter was 0.13 yuan/jin, and the average farming profit from January to June was +0.17 yuan/jin. The short - term loss is not enough to drive large - scale culling [5] 2. Thoughts on the Current Egg - Chicken Capacity - Reduction Path - In 2020, when the price was below 3 yuan/jin for more than half a year, the first low point appeared in early February with a culling age of over 500 days, and the second low point from mid - May to mid - June led to a culling age dropping to a minimum of 446 days and basic capacity clearance [2][7] - This year, the first price low may be in early July. As of June 30, the Guantao egg price was 2.49 yuan/jin, and the culling age was 508 days. According to historical data, a second low and its persistence are needed to drive large - scale culling. However, the second low may be offset by the consumption peak, and the capacity - reduction may occur in the fourth quarter of this year or the first quarter of next year [2][8] 3. Strategy Recommendations - Focus on the culling rhythm and amplitude of the egg - chicken farming end in the third quarter. If the culling is less than expected, pay attention to the short - selling opportunities of contracts in the fourth quarter of this year and the first quarter of next year [10] - Egg - chicken farming enterprises are advised to consider the selling hedging opportunities of relevant contracts in the fourth quarter and the first quarter of next year [10]