Core Viewpoint - The egg price is expected to face upward pressure in July and August due to seasonal factors, but the rebound is weak this year due to insufficient capacity reduction and early stockpiling for the Mid-Autumn Festival [1] Supply and Demand Analysis - The egg-laying industry is currently experiencing an oversupply, weak demand, and intensified cost competition, necessitating close attention to the transmission of profits to capacity [1] - The current culling behavior of farmers will significantly impact egg supply seven months later, as new chicks take time to start laying eggs [2] Market Cycle and Price Trends - The egg market can be qualitatively divided into four phases: prosperity, pressure, clearance, and recovery, with historical averages indicating that the current pressure phase has lasted longer and deeper than average [1] - The average price drop during the pressure phase is 12%, while the clearance phase sees an average drop of around 5% [1] Futures Market Dynamics - The egg futures market has shown a significant decline in August, primarily driven by basis correction, with the near-month contract basis reaching a historical low [2] - The current contango state in the egg futures market reflects ongoing expectations of oversupply, with the near-far month contract spread remaining relatively high [3] Strategic Recommendations - A single strategy is suggested to short near-month contracts as egg prices are expected to continue declining until March next year [3] - An arbitrage strategy is recommended, considering the near-weak and far-strong structure in the futures market, which is likely to persist until capacity is cleared [3] - A dynamic bear spread strategy is advised for the main contract as the market approaches the boundary between the pressure and clearance phases [3]

Group 1 - The current egg market is characterized by abundant supply, weak demand, and intensified cost competition, with a focus on the transmission of profits to capacity [1] - The egg fundamental cycle is qualitatively divided into four stages: prosperity, pressure, clearing, and recovery, with the current position identified as the pressure phase, indicating downward pressure on profits [1] - Historical analysis from 2019-2020 shows that after capacity expansion broke the supply-demand balance, egg prices fell sharply, leading to industry losses and subsequent capacity reduction [1] Group 2 - The egg futures market in 2024 mirrors the patterns observed in 2019-2020, with a shift from Back to Contango structure following the peak in egg prices [2] - The current egg industry has experienced four consecutive years of profitability, enhancing its risk resistance, while supply pressure on near-month contracts is increasing [2] - The price spread between near and far-month contracts is significantly higher compared to 2020, indicating a likelihood of continued decline in the future [2] Group 3 - Historical data indicates a negative correlation between the duration of price declines during the plum rain season and the rebound time after the Spring Festival, suggesting prolonged price drops this year [3] - The expected low point for egg prices during the plum rain season in 2025 is projected to occur around early July, based on past trends [3] - The futures market often experiences "running ahead" behavior, with price lows typically appearing about a month in advance during the plum rain season [3] Group 4 - Three strategies are recommended: a short-selling strategy before the plum rain season, an arbitrage strategy due to the near-weak and far-strong structure, and an industry strategy focusing on corn and soybean meal contracts while shorting egg contracts [4]