中国农业主题发酵_追踪生猪供应管控- China Ag theme in play_ Tracking hog supply discipline

Summary of China Agriculture Sector Quarterly Conference Call Industry Overview - Industry Focus: China Agriculture Sector, specifically hog supply discipline and pricing trends for various proteins [1][11] - Key Players Discussed: Major hog producers, sow feed producers, hog industry consultants, and hog vaccine producers [11][12] Core Insights Hog Supply and Pricing - Hog Supply Control: Industry feedback indicates that control of unit hog weight and the removal of secondary fattening practices are progressing according to policy guidance. However, the reduction of the sow herd is lagging [1][12] - 2026 Supply Forecast: Expected hog supply to decline by 5% year-over-year, resulting in a 2% supply deficit. This is anticipated to improve industry hog farming margins by Rmb0.9/kg [1][13] - Benchmark Hog Price: Revised benchmark hog price for 2026E is Rmb14.8/kg, which is 14% higher than current levels [1][14] Other Proteins Pricing Trends - Mixed Pricing Trends: Domestic pricing trends for major proteins are mixed, with recovery noted in poultry and beef prices due to lower imports, while aqua and egg prices remain flat [2][7] - Consumption Trends: Downstream consumption has softened, leading to a contracting crush margin and weaker pricing for methionine and API index [2] Company Ratings and Recommendations - Buy Ratings: - Dabeinong (DBN) for improved biotech seeds earning visibility [3] - Haid for aqua feed growth and potential recovery in poultry feed [3] - Neutral Ratings: Wens and New Hope due to lower expected earnings [26] Additional Important Insights - Sow Herd Trends: The domestic sow herd size was flat month-over-month in July 2025, remaining 5% above the target set by the Ministry of Agriculture (MoA) [4][41] - Secondary Fattening: The practice of secondary fattening has decreased significantly, accounting for only 1% of total hog sales in August 2025, down from a peak of 6% in April [14][19] - Cost Trends: Total unit hog cost is projected to range from Rmb12.0-13.0/kg in 3Q25E, down from Rmb14.5-15.5/kg in 1Q24A [20] - Profitability Spread: The spread between hog pricing and unit feed cost has narrowed due to soft hog prices, while unit feed costs remain flat [55] Earnings Revisions - Earnings Estimates: Revised down by 1-12% for 2025E, 6-24% for 2026E, and 2-7% for 2027E for hog-related stocks, reflecting lower unit net hog profit and market output [26] Risks and Challenges - Key Risks: Include uncertainties in hog prices, execution risks in new project expansions, operational risks related to bio-security and disease control, and potential impacts from ASF infection on hog business [29][30] Conclusion - The China agriculture sector, particularly the hog industry, is undergoing significant changes with a focus on supply discipline and pricing recovery. While there are positive trends in hog pricing and supply management, challenges remain in herd reduction and overall profitability. The outlook for major companies varies, with some maintaining buy ratings while others are neutral due to expected earnings declines.