Investment Rating - Industry rating: Outperform the market (maintained rating) [13] Core Views - The report emphasizes the importance of reducing production in the pig sector, highlighting the expectation gap in the industry [1][2] - The dairy sector is experiencing a bottoming out of raw milk prices, with a potential new cycle for beef cattle starting [3][19] - The pet food sector is witnessing the rise of domestic brands and a positive trend in exports [4][21] - The poultry sector is focusing on the shortage of breeding stock and improving consumer demand for yellow chickens [5][23] - The planting sector is prioritizing food security and the strategic importance of biological breeding [8][29] - The feed sector is recommended for companies with increasing market share and consistent performance, particularly Haida Group [10][31] Summary by Sections Pig Sector - As of July 26, the average price of pigs is 14.81 CNY/kg, stable compared to the previous week, with a notable high average weight of 128.48 kg for market pigs [1][17] - The Ministry of Agriculture emphasizes strict capacity control measures to reduce the number of breeding sows and control the weight of pigs being sold [1][18] - The sector is currently undervalued, with leading companies like Muyuan Foods and Wens Foodstuffs showing low average market values [2][18] Cattle Sector - As of the third week of July, live cattle prices are 26.53 CNY/kg, down 0.2% week-on-week, while raw milk prices remain at 3.04 CNY/kg [3][19] - The dairy industry has faced significant losses, with an estimated cumulative income loss of 70 billion CNY from 2023 to 2025 [3][20] - Companies that can withstand the current downturn and have mother cow resources are expected to have strong profit potential [3][20] Pet Sector - Domestic brands in the pet food market are growing rapidly, with significant sales figures reported [4][21] - Pet food exports have increased, with 167,900 tons exported in the first half of 2025, reflecting a year-on-year growth of 5.7% [4][21] - Recommended companies include Guibao Pet Food and Zhongchong Co., with a focus on high-growth domestic companies [4][22] Poultry Sector - The report highlights the uncertainty in breeding stock imports due to avian influenza outbreaks, leading to a 33.46% year-on-year decline in breeding stock updates [5][23] - As of July 26, the price of broiler chicks has increased to 2.6 CNY/chick, driven by reduced supply and increased stocking enthusiasm [5][24] - Investment suggestions include focusing on self-breeding opportunities and companies with alternative breeding resources [5][26] Planting Sector - The report stresses the need for a focus on increasing grain production through improved yield and the integration of various agricultural practices [8][29] - The importance of financial support for seed industry revitalization is highlighted, with a push for the commercialization of genetically modified crops [8][29] - Recommended companies include Longping High-Tech and Dabeinong [8][30] Feed Sector - Haida Group is highlighted as a key player in the feed sector, with expectations of market recovery following a prolonged downturn [10][31] - The report notes significant price fluctuations in raw materials, which could benefit companies with strong hedging and feed formulation capabilities [10][31]

Investment Rating - The report maintains an "Overweight" rating for the agricultural sector, indicating a positive outlook despite short-term disturbances from trade tensions [4][6]. Core Insights - The report highlights that while short-term trade tensions may impact certain agricultural products, the long-term outlook remains manageable through diversification of import sources and enhancing self-sufficiency [6][14]. - The Chinese agricultural sector is expected to benefit from the implementation of the "Plan for Accelerating the Construction of an Agricultural Powerhouse (2024-2035)" which emphasizes food security and agricultural competitiveness [6][14]. Summary by Sections Trade Tensions - Recent data shows that the proportion of agricultural imports from the U.S. has decreased, with 2024 imports from the U.S. accounting for approximately 6.3% of total imports, down from 8.3% in 2017 [6][14]. - The report notes that most agricultural products have low import dependency, while a few, such as soybeans and sorghum, are more reliant on imports, particularly from the U.S. [6][14]. Meat Products - China is a major producer of pork, with a projected production of 57 million tons in 2025, accounting for nearly 50% of global production [18][20]. - The report anticipates a recovery in China's pig production capacity in 2025, with prices expected to fluctuate, initially declining before rising later in the year [39][40]. - Chicken production in China is projected to reach 15.5 million tons in 2025, with low import dependency, particularly from the U.S. [41][46]. Grain Products - China ranks second globally in corn production, with a projected output of 294.92 million tons in 2024/25, while maintaining a low import dependency [75][78]. - The report indicates that corn prices have shown signs of recovery, with domestic prices reaching 2285.29 yuan per ton as of April 2025 [79][80]. Investment Recommendations - The report suggests focusing on leading companies in the agricultural sector, including Muyuan Foods, Wens Foodstuff Group, and New Hope Liuhe, which are expected to benefit from the sector's growth [6][14].