The Zhitong Finance App learned that CICC released a research report saying that pig prices may weaken further in August and cause industry losses to widen, and production capacity may be reduced compared to July; along with production capacity removal in the first half of the year and seasonal recovery in demand in the second half of the year, the bank expects the average price of 2H26 and 1Q27 pigs to be 11, 11.5 to 12.5 yuan/kg. In terms of feed, the sharp rise in the price of fishmeal compounded the low profitability of aquaculture, putting pressure on the quantity and profit of aquatic feed.
CICC's main views are as follows:
Pig price prediction: The July price rebound was not supported by fundamentals, and the August price may make up for the decline
Looking at the short term, the bank estimates that supply and demand in July 2026 was slightly stronger than in June, and the supply and demand in August was flat compared to expectations. The bank determined that July prices were better than theoretical supply and demand as a rebound caused by short-term inventory disturbances and speculative demand. August was affected by supply delays, and prices may make up for the decline. In the medium term, the bank expects 2H26/1Q27 pig supply to be +2%/-3% year-on-year. The shift between high and low season demand from 1H26 to 1Q27 will drive supply and demand to decrease and then increase. Thus, the average price center for 2H26 and 1Q27 pigs is 11, 11.5-12.5 yuan/kg.
Pig operations and production capacity: Cash outflow rate slowed in July but pressure is still there. Production capacity loss in August may accelerate compared to July
1) Operation: In July, the industry's self-production cost was 12.6 yuan/kg, the same month-on-month; in July, Muyuan's full cost was 11.5 yuan/kg, ahead of the industry's excess of 1.1 yuan/kg; 2) Capital: In July, corporate cash outflow slowed. The bank estimated that the average cash loss of the sample company decreased by 130 yuan/head to 91 yuan/head compared to June, and the monetary capital/cash loss index was 58% in history. 3) Production capacity prediction: In July, the country's sample capacity to breed sows slowed down. In August, the bank expects industry losses to increase or drive capacity removal to accelerate month-on-month.
Feed: Fishmeal price increases drive up the cost of aquatic products, putting pressure on aquaculture volume and profits
1) Production: The bank expects that the year-on-year increase in pig supply will drive the 3Q pig feed growth rate; stable meat and poultry profits will drive stable meat and poultry feed; the year-on-year decline in fishery profits will suppress enthusiasm for feeding, and marginal pressure on aquatic products. 2) Distribution gap: The rise in fishmeal prices suppressed the distribution gap of aquatic products. The bank estimated that the distribution difference for a single ton of pork/poultry/aquatic food in July was 719/677/1,363 yuan, respectively, compared to -24/-33/ -110 yuan.
Valuation and recommendations
We recommend the leading pig company Muyuan Co., Ltd., Wenshi Co., Ltd., Dekang Agriculture and Animal Husbandry, etc.; Haida Group, the leading feed company.
risk
Pig prices have fallen short of expectations, raw materials have risen sharply, and there is a risk of pig epidemics.