Summary of Key Points from the Conference Call Industry Overview - The conference call primarily discusses the **agriculture industry**, focusing on **animal protein sectors** such as **pig farming**, **dairy farming**, and **beef cattle farming** [1][2][34]. Core Insights and Arguments Pig Farming - The **pig farming cycle** is driven by production capacity, with the number of breeding sows being a critical leading indicator. This needs to be cross-verified with data on sow feed sales [1][2]. - The **African swine fever** has normalized, raising the industry's cost base, which affects the peak and elasticity of the cycle [1][4]. - **Scale farming** may extend the pig cycle and amplify price fluctuations. Secondary fattening increases price disturbances, influenced by short-term price expectations [1][5]. - The **反内卷 (anti-involution) policy** aims to reduce the number of breeding sows and lower slaughter weights to support pig prices [1][11]. - The average price of pigs is expected to rise to over **16 RMB per kilogram** by **2026**, with **牧原股份 (Muyuan Food)** potentially achieving a profit of nearly **500 RMB per head** [1][14]. Dairy Farming - The dairy industry faces challenges due to falling milk prices, currently around **3 RMB per kilogram**, down from **4.5 RMB**. However, there is potential for demand improvement due to increased willingness to have children and government subsidies for newborns [1][17]. - The beef cattle sector has a long growth cycle and is heavily reliant on imports, with significant industry clearing observed [1][18][20]. Market Dynamics - The **white chicken farming** sector is significantly impacted by overseas breeding policies, with potential for market share growth for **圣农 (Sannong)** during periods of import disruption [3][25]. - The **seafood feed** segment is expected to improve due to rising prices of common aquatic products, with **海大集团 (Haida Group)** showing strong performance in this area [3][27]. Other Important Insights - The **agricultural new consumption trends** include rapid growth in pet food and pet healthcare sectors, indicating new growth potential beyond traditional areas [6][34]. - The **agricultural input products** like feed and veterinary products serve as lagging indicators in the animal protein supply chain, aiding in capacity data assessment [7][34]. - The **grain security** theme is increasingly important, with policies and market dynamics needing close attention [8][30]. Investment Recommendations - Focus on core assets like **牧原 (Muyuan)** and **温氏 (Wens Food)**, which have strong cost control and are less affected by the anti-involution policy [12][13]. - The **港股 (Hong Kong stock market)** upstream livestock companies are currently in a challenging phase but are expected to improve by **2026** as the new cycle begins [22]. - **海大集团 (Haida Group)** is recommended for its strong market position and growth potential in both domestic and international markets [27]. Future Trends - The pig farming sector is expected to benefit from the anti-involution policy, leading to a new upward price cycle in **2026** [15][34]. - The **meat cattle industry** is facing significant challenges, including price declines and industry losses, with a low degree of scale [20][21]. This summary encapsulates the key points discussed in the conference call, providing insights into the current state and future outlook of the agriculture industry, particularly in the animal protein sectors.

Summary of the Conference Call on Beef Cattle Industry Industry Overview - The conference call focused on the beef cattle industry in China, discussing supply, demand, pricing trends, and market adjustments from 2023 to 2025 [1][3][4]. Key Points and Arguments Supply Dynamics - In 2023, the domestic beef supply was relatively loose, but a tightening trend is expected starting in 2025 [1]. - By the end of 2024, the number of beef cattle is projected to decrease by 4.4%, with further declines in early 2025, indicating a trend of capacity reduction [1][4]. - The number of breeding cows is expected to decrease by approximately 3% from January to November 2024, with newborn calves decreasing by about 10%, which may impact future beef production [1][5]. Pricing Trends - Beef prices have shown a slight recovery since March 2025, currently at 69.72 yuan/kg, which is 1.7% higher than the same period last year and close to 2019 levels [1][7]. - The average price for the year is expected to be stable or slightly higher compared to last year, driven by seasonal demand in autumn and winter [9][10]. Market Adjustments - The beef cattle industry is undergoing adjustments due to prolonged price declines, leading many farmers to reduce their scale or exit the market [4][20]. - The capacity reduction trend is expected to continue until the end of 2025 and possibly into 2026, with breeding cow numbers potentially dropping to 5%-6% of peak levels [8][25]. Import and Trade Dynamics - China relies on low-priced imported beef, which accounts for about 27% of its beef supply, with the total impact of low-priced imports nearing 30% [3][15]. - The Ministry of Commerce may implement trade relief measures, such as tariffs or quotas, to protect the domestic industry from the impact of low-priced imports [13][19]. Future Outlook - The beef production supply is anticipated to be affected in the coming years due to the long breeding cycle, with a significant reduction in breeding cows and newborn calves [5][12]. - The international beef supply is expected to tighten due to climate impacts in major beef-producing countries like Brazil and Argentina, leading to increased global beef prices [11][10]. Additional Important Insights - The beef cattle industry has experienced significant price cycles, with notable downturns in 1997-2000 and 2015-2016, and a current downturn since 2023 [21]. - The relationship between beef prices and raw milk prices is relatively weak, indicating that fluctuations in one do not directly affect the other [22]. - The Ministry of Commerce's extension of the investigation into import beef protection measures suggests ongoing challenges in the domestic market and a need for protective policies [19][20]. This summary encapsulates the critical insights from the conference call regarding the beef cattle industry, highlighting supply trends, pricing dynamics, market adjustments, and future outlooks.

Summary of the Conference Call on the Beef Cattle Industry Industry Overview - The beef cattle industry is experiencing a cyclical adjustment, with a significant reduction in production capacity. In 2024, beef cattle production capacity is expected to decrease by 4.4%, followed by reductions of 3.5% and 2.1% in the first and second quarters of 2025 respectively. It is anticipated that the reduction trend will continue into 2025, potentially ending in the first half of 2026 [1][4]. Key Points on Production and Supply - The number of breeding cows and newborn calves is declining, with breeding cows expected to decrease by 13% in 2024 and newborn calves by 8%. In 2025, the decline for breeding cows is projected to be between 5%-7%, and for newborn calves, it is expected to be 9%-10% [1][5][6]. - The scale of beef cattle farming remains low, with only 39% of operations being large-scale. Most herds are managed by smallholders, particularly breeding cow herds [1][7]. - A new upward price cycle has begun, expected to last between 1.5 to 2 years, with peak prices projected between 75 to 80 yuan per kilogram, although not reaching the levels seen during the African swine fever outbreak [1][8]. Price Trends and Consumer Demand - Beef prices are expected to rise in the autumn and winter seasons, driven by holiday consumption, with a potential peak in the second half of 2025. Current prices for live cattle in major producing provinces are above the breakeven point, indicating profitability for fattening bulls and calves [1][9]. - Consumer demand is anticipated to remain flat in 2025 compared to 2024, with economic conditions leading to conservative spending and reduced demand for high-end beef products. Competition from substitutes like chicken and pork is also impacting beef consumption [1][11]. Import Dynamics and Market Impact - China's beef imports have surged due to domestic supply shortages and competitive pricing from abroad, with imports accounting for nearly 30% of the domestic market. This has led to significant losses in the domestic industry, with around 60% of producers facing losses [1][12][13]. - The impact of rising overseas beef prices is being felt domestically, as increased costs for imported beef are passed on to consumers, leading to higher prices in the domestic market [1][29]. Future Outlook - The beef market is expected to face ongoing challenges due to the tight supply situation and rising prices internationally, particularly from Brazil and the U.S., which are experiencing production declines [1][2][16][25]. - The overall profitability of the beef cattle industry has improved in 2025, with fattening bulls and calves achieving profits due to favorable price conditions following low-cost purchases in 2024 [1][10]. Additional Insights - The beef cattle industry has historically shown resilience, with prices remaining relatively stable since 2000, despite recent fluctuations. The current downturn is noted as one of the most significant in recent years, influenced by structural adjustments within the industry [1][18][19]. - The slow pace of scale-up in the beef cattle industry is attributed to high capital requirements and the predominance of small-scale farming practices [1][23][24]. This summary encapsulates the key insights and trends discussed in the conference call regarding the beef cattle industry, highlighting production dynamics, pricing trends, consumer behavior, and the impact of imports on the domestic market.

Summary of China Shengmu's Conference Call Industry Overview - The dairy industry is experiencing weak raw milk demand and excess upstream capacity, but a price turning point is expected next year, potentially accelerated by improved downstream demand or large-scale upstream clearance [2][3] - Beef prices have significantly increased since the end of 2024 and are expected to continue rising in the second half of the year, reflecting optimistic market expectations [2][3] Company Strategy and Focus - China Shengmu is focusing on the organic dairy sector, aiming to increase its market share, with organic milk accounting for 80% of its products, while phasing out regular milk [2][10] - The company plans to enhance its specialty milk offerings, including A2 and DHA milk, which have a stable price premium of around 30% compared to regular products [2][10][12] - The company aims for a slight increase in livestock numbers and a production target of nearly 12.5 tons per cow in 2025, emphasizing animal welfare and sustainable practices [2][13] Financial Performance - The company has a strong financial position, having increased long-term loans and cash reserves to navigate the industry downturn effectively [4][23] - The average valuation of dairy cows is approximately 21,000 yuan, which is among the lowest in the industry, providing potential for increased profitability as beef prices rise [4][17] Market Position - Shengmu is a core supplier of organic milk to Mengniu, providing 80% of its organic raw milk needs, and holds a significant market share in the organic milk sector [4][9] - The company currently holds about 35% to 40% of the overall organic raw milk market, with a competitive landscape that includes other suppliers like Youyuan and several smaller firms [8][9] Pricing and Cost Structure - The current selling price for organic milk is around 4.4 to 4.45 yuan per kilogram, with a cost of approximately 3.1 yuan, resulting in a gross margin of about 29% for 2024 [22] - The company expects a slight decrease in gross margin for 2025, but overall profitability is anticipated to remain stable due to declining costs [22] Beef Business Development - The beef business is seen as a secondary focus, with plans to increase investment in specialty beef to enhance profit margins [5][28] - The company has begun to see profitability in its beef operations, with expectations for further improvement as beef prices continue to rise [26] Future Outlook - The company is optimistic about the growth potential of the organic milk market, despite a potential slowdown in growth rates compared to previous years [6][8] - Shengmu plans to maintain its focus on specialty milk and improve production efficiency to meet rising consumer demand [7][10] Challenges and Considerations - The company faces challenges in expanding its organic tea production capacity due to higher barriers compared to regular tea, but it has resources and systems in place to facilitate this transition [42][43] - Shengmu does not plan to expand its scale or import more cows during the current market downturn, focusing instead on optimizing its herd structure [35] Conclusion - China Shengmu is strategically positioned in the organic dairy market with a strong focus on specialty products and a solid financial foundation, while also navigating challenges in the beef sector and overall market conditions. The company is optimistic about future growth opportunities in the organic segment and is committed to sustainable practices.

Core Viewpoint - The meeting held on July 31 aimed to discuss the high-quality development of China's beef industry, highlighting the need for improved beef cattle breeds and better integration across the industry chain [1][3]. Group 1: Industry Challenges - The current beef industry in China lacks high-quality and efficient beef cattle breeds, with carcass weight and feed-to-meat ratio lagging behind global standards [3]. - High breeding costs contribute to low overall production efficiency in the beef industry [3]. - The beef industry chain lacks a necessary profit connection between breeding, processing, sales, and dining sectors, leading to uneven profit distribution [3]. - Significant imports have resulted in a decline in beef prices, with 2024 projections indicating imports of 5.96 million tons of various meats, including 2.9085 million tons of beef, which accounts for 48.8% of imported meat [3]. Group 2: Research and Development Initiatives - The establishment of the Shenglong Beef Industry Research Institute aims to address these challenges through high standards, strong mechanisms, and optimal layouts, focusing on full-chain standard formulation and beef source certification [3]. - A team of 25 top experts from the National Beef and Yak Industry Technology System was formed to provide technical support for the research institute [1]. - The meeting elected Li Junya as the director of the academic committee and Cao Binghai as the executive deputy director [4]. Group 3: Practical Insights - Experts conducted a field visit to Shenglong Beef's base in Qingyuan to observe the operations of beef fattening and slaughter processing, linking theoretical discussions with practical industry applications [4].

Group 1 - The traditional livestock financing model faces challenges due to high risks associated with live assets, making it difficult for farmers to secure loans [1] - A new data management platform has been established in Longjiang County, allowing for detailed digital records of livestock, which enhances the accuracy of loan assessments and reduces manpower costs [2] - The "data + finance" model is being rapidly replicated in other regions, such as Huachuan County, where 60% of livestock farmers have digital records, improving risk management in financing [2] Group 2 - The central government's policy emphasizes support for the beef and dairy industries, with agricultural credit guarantee systems responding by providing significant loan guarantees [3] - In the first four months of this year, Longjiang Agricultural Guarantee Company provided 279 million yuan in loan guarantees through various products [3] - Nationwide, the agricultural credit guarantee system has supported over 210,000 agricultural entities, directing more than 120 billion yuan in low-cost loans to essential agricultural sectors [3]

Core Insights - The Huaxi cattle breed, developed over 40 years by Chinese scientists, has gained a steady market share and has been included in the list of leading agricultural breeds in China, accelerating its promotion [1][3] - Huaxi cattle exhibit competitive growth metrics, with an average daily weight gain of 1.36 kg, a slaughter rate of 62.4%, and a net meat rate of 53.9%, aligning with international standards [3] - The introduction of Huaxi cattle has improved the income of farmers, with an estimated economic benefit of 7 billion yuan from the breeding of over 7 million cattle [3][4] Industry Development - The breeding scale of Huaxi cattle has been expanding, with an average annual growth rate of 6% over the past four years, supported by local policies and technical assistance [4][6] - Challenges remain in increasing market acceptance of Huaxi cattle, which has only been recognized for about four years, compared to the century-long history of imported breeds like Simmental [6] - Continuous improvement and innovation in the technical system for Huaxi cattle breeding are necessary to enhance production performance and competitiveness [6]

Summary of the Conference Call on the Beef Cattle Industry Industry Overview - The conference call focused on the beef cattle industry in China, highlighting key trends and forecasts for 2025 and beyond [1][10]. Key Points and Arguments Supply and Demand Dynamics - In the first half of 2025, China's beef cattle slaughter volume increased by 2.9% year-on-year, while beef production rose by 4.5%. However, the cattle inventory decreased by 2.1%, and imports fell by 9.5%, indicating a slight contraction in overall beef supply [1][10]. - Seasonal demand patterns were noted, with a peak in beef prices observed post-Chinese New Year due to delayed operations of small slaughterhouses and concentrated orders from large enterprises [1][13]. - The average profit for small bulls and heifers sold after the Spring Festival was reported to be over 2,000 yuan, with some cases reaching up to 3,000 yuan [14][15]. Future Projections - A decline in both cattle inventory and slaughter volume is expected in the second half of 2025, with an overall production decrease of approximately 1%. Imports are projected to drop to around 2.5 million tons [1][16]. - The beef price is anticipated to be higher than in 2024, with a forecasted price range of 26.5 to 27 yuan per kilogram in the fourth quarter [17][21]. - A new cycle in the beef cattle industry is expected to begin in the first half of 2026, with peak prices projected between 32 to 35 yuan per kilogram, potentially lasting until 2027 [1][20]. Market Structure and Challenges - The industry is characterized by a high proportion of small-scale producers, with over 90% of cattle raised in small groups, leading to inefficiencies and market volatility [3][9]. - The concentration of slaughtering operations remains low, with no dominant players in the market, which further restricts overall industry efficiency [9]. - The impact of imported beef, which accounts for about 25% of total consumption, is significant for short-term market supply [6][28]. Cost Structure and Profitability - The cost structure of beef cattle farming is heavily influenced by the purchase price of calves or feeder cattle, which constitutes about 68% of total costs, while feed costs account for 17% [14][24]. - The profitability of beef cattle farming is closely tied to the feeding methods and cost structures, with concentrated feeding models showing better profitability compared to self-breeding [14][26]. Regulatory Environment - The Chinese government has maintained a supportive stance towards the domestic beef market since becoming a net importer in 2013, with recent measures aimed at combating smuggling and ensuring the development of local producers [28][29]. Additional Important Insights - The cyclical nature of the beef market was discussed, with historical cycles lasting approximately 8 to 9 years, influenced by factors such as consumer income, feed costs, and external market conditions [8]. - The current economic environment and consumer behavior are expected to impact demand, with seasonal variations affecting purchasing patterns [7][11]. This summary encapsulates the critical insights from the conference call regarding the beef cattle industry, focusing on supply-demand dynamics, future projections, market structure, cost analysis, and regulatory considerations.

Summary of Conference Call on Swine and Livestock Industry Industry Overview - The swine industry is experiencing intensified competition, leading to increased trial and error costs for companies, resulting in some reducing production or exiting the market [1][2] - The overall market is characterized by a "short bull, long bear" cycle, with the agricultural sector underperforming in the secondary market [1][2] Key Insights and Arguments - Pork price fluctuations significantly impact the Consumer Price Index (CPI), despite pork's low share (1.2%-1.5%) in CPI, due to its strong cyclicality and amplification effects [1][3] - In the first half of 2025, pork prices are expected to decline by 20% quarter-on-quarter, with potential further decreases in the second half if no policy interventions occur, affecting CPI negatively [1][4] - Approximately one-third of breeding entities are currently operating at a loss [1][4] Policy Measures - The National Development and Reform Commission (NDRC) is leading a multi-ministerial effort to balance swine supply and demand, aiming to reduce the number of breeding sows to 39.5 million to reverse the cycle and increase prices [1][5] - Initial policy execution has been weak, with some leading companies expanding against the trend, prompting regulatory bodies to strengthen credit policies to maintain a price floor of 14 yuan/kg [1][6] Investment Recommendations - Recommended companies include: - **Muyuan Foods**: Noted for its significant cost advantage and potential for profit release, with projections of achieving over 30 billion yuan in profits if costs drop to 11 yuan/kg by 2026 [1][8] - **Bangji and Dekang**: Innovative companies focusing on empowering farmers and achieving efficient expansion through light-asset models [1][8] Livestock Industry Trends - The beef industry is currently in a deep loss phase, but with reduced imports due to anti-dumping investigations, a capacity clearance is expected [3][10] - The beef cycle is similar to the swine cycle, with low production rates and slow recovery in capacity expected [3][10] Future Prospects for Dairy and Beef Companies - Companies like **Yuran** and **Shengmu** are expected to benefit from the cyclical recovery in both beef and dairy markets, with stable operations and prices above industry averages [3][11] - Profit projections for Yuran are estimated at 2.8 to 4 billion yuan by 2026, while Shengmu is expected to reach 600 million to 1 billion yuan [3][13] Overall Investment Strategy - The livestock sector, including swine, beef, and dairy, presents significant investment potential. Companies like Yuran and Shengmu are recommended for their dual-benefit logic and stable operational status [3][14] - Continuous monitoring of policy changes and anti-dumping investigations is advised to adjust investment strategies accordingly [3][14]

Core Viewpoint - The agricultural sector, particularly in beef and dairy farming, is recovering from previous losses due to a series of supportive policies and market improvements [2][3]. Group 1: Market Situation - The beef cattle industry has turned profitable after a period of losses, with live cattle prices rebounding since the Spring Festival, leading to three consecutive months of profitability [2]. - In the dairy sector, there has been a 4.2% year-on-year decrease in the number of Holstein cows, and the cost of milk production has dropped by 7.7% year-on-year, indicating a positive trend in dairy farming [2]. Group 2: Policy Measures - The Ministry of Agriculture and Rural Affairs is implementing various relief measures, including financial support and monitoring of dairy farms, to stabilize the market and improve production efficiency [3]. - Policies are being guided to enhance the quality of breeding stock and to control production capacity, aiming to stabilize market expectations [3]. Group 3: Future Outlook - The Ministry plans to continue promoting relief measures, focusing on extending the industrial chain, increasing added value, and enhancing competitiveness in both beef and dairy sectors [2][3]. - Upcoming factors such as reduced production due to heat stress in dairy cows and increased consumption of cold drinks are expected to further support the recovery of the dairy market [2].