Cofco Review: Hangzhou will be pig industry, pig prices and feed views.

this article was first published on September 11 at COFCO Futures Research Center, and is reviewed here.
S6e
Viewpoint 1: Pig farming has been non-growth industry, the amount of breeding tends to saturate, the scale accelerates, feed enterprises to the downstream layout.
S6e .(1) Since 2015, the proportion of domestic per capita pork consumption has declined, and may continue to decline in the future, with pork consumption becoming saturated or slow growth, the pig industry is no longer a growth industry. According to the data of beijing Xinfa land meat wholesale market and the sales of meat products of Shuanghui and Longda meat, the sales of raw frozen pork and meat products are basically saturated.
S6e .(2) The two outstanding features of the industry after entering the maturity period are the acceleration of scale and the improvement of production efficiency, the proportion of pig farms on a large scale to increase overlay production efficiency and the continuous improvement of the ratio of meat, making the amount of culture tend to saturate or even slightly lower, while the pork production increased moderately.
S6e .(3) In this wave of scale, the breeding sector has attracted financial attention, in addition to the expansion of production capacity of aquaculture enterprises, feed enterprises are also actively expanding downstream aquaculture. Compared with slaughtering enterprises, why is the feed enterprises more obvious to the expansion of breeding? The reason: First, the low concentration of aquaculture, second, the comparison of feed, breeding and slaughtering three links of the benchmark enterprise new hope, mubaration and shuanghui profit indicators of the last 5 years, the gross profit margin and return on net assets of The Makuyuan are better than the new hope feed business, and the double foreign exchange gross margin is more stable, located in between, and the return on net assets performance is excellent, while breeding and feed can form a good synergy.
S6e .Point 2: 2017 sow storage column growth, 2018 to capacity strength and time are not enough, next year pig prices are not optimistic, but with the enterprise operating cash flow tight, financing tightening and asset-liability ratio, enterprise expansion and business risk, the pace of expansion will be significantly slowed, the industry expansion rate is expected to improve in 2020 pig supply side, pig price selling expectations.
S6e .(1) With the bottleneck of pork consumption growth, the contraction and expansion of the supply side will have a greater impact on the pig cycle.
S6e .(2) Referring to the data of the U.S. pig industry, after the scale level has improved significantly, pork prices are still showing cyclical fluctuations, the volatility has not narrowed, but the cycle span has been extended.
S6e .(3) The 2017 sow storage data is controversial, from 180 key monitoring feed enterprise data, in 2017 sow and piglet sales increased by 8% and 14.8% year-on-year, respectively, while the purchase price of reserve sows is at a relatively high historical high, overall, the 2017 sow storage column should be the trend of growth.
S6e .(4) 2018 pig prices are depressed, from the piglet loss and research situation, the industry to capacity and time are not enough, 2019 pig prices are still not optimistic.
S6e .(5) Since this year, aquaculture enterprises have been faced with tight operating cash flow, higher financing costs and tightfinancing financing environment, asset-liability ratio increased situation. Next year pig prices are also difficult to improve, if enterprises continue to expand, capital and operational risks will be improved, so this year's expansion of production capacity is bound to slow down significantly, after 2020 pig supply will improve, pig prices are expected to rise.
S6e
View 3: African swine fever is not a highly contagious disease, it will appear later, but will not affect industry capacity in large areas. African swine fever is non-zoonotic and has a less significant impact on consumption. Before the Spring Festival, pig transfer supervision continued to tighten, in the past 2 years pig production capacity northward shift, the transfer was blocked after the pork region supply and demand contradictions highlighted, the trend of differentiation, the national pig prices continue to be strong.
S6e .(1) According to foreign research experience, African swine fever is an man-driven disease, in recent years in Europe frequent outbreaks, African swine fever mainly along the road and railway spread, which is closely related to the movement of people, vehicle transport.
S6e .(2) African swine fever is not a highly contagious disease, but has a high fatality rate. African swine fever virus is relatively stable, strong resistance to the environment, in frozen meat can exist indefinitely.
S6e .(3) At present, 14 outbreaks have been confirmed in China, and the situation of prevention and control is serious. Epidemic point to small-scale pig farms mainly, the first four outbreaks occurred in the presence of the phenomenon of eating waste feeding pigs, at present, governments at all levels are cleaning up water-fed farmers, while suspending the African swine plague outbreak province pig outside the coordination and closure of the province's pig trading market.
S6e .(4) Combined with the characteristics of ASF virus and domestic breeding environment, the later stage is likely to appear, the epidemic will exist for a long time, but compared with 2006-2007 blue ear disease, this round of government response speed is very fast, strong implementation, fighting is prepared. We believe that the probability of large-scale area of the epidemic area is small, the industry capacity will not be greatly affected.
S6e .(5) AsF's impact on pig prices:
S6e 1, nearly 2 years of pig production capacity northward shift, the transfer is blocked after the pork region supply and demand contradictions highlighted, the trend is divided;
S6e .2, the medium-term view (before the Spring Festival), even if the blockade of the epidemic area lifted, does not mean that the transfer of pigs, the national pig price or continue to be strong.
S6e .　　3. In the long run, we prefer that pig prices in 2019 will be better than previously judged. The reasons are: the rectification of water-fed breeding around the city, the tightening of transportation, the adjustment of production capacity in the northeast region, the increased control of the transfer of pigs and live pigs, and the impact on the small retail supplement column.
S6e
View 4: Feed consumption increased steadily in 18/19.
S6e .　　18/19 Feed consumption increased steadily. Broiler, affected by upstream capacity supply, will remain in a boom cycle next year, similar to the pig industry in 2016, where consumption of broiler materials increased by 5% year-on-year. Egg and chicken stocks are still in the growth stage, next year egg prices will be under supply pressure correction, but the whole year is still above the cost line, similar to the 2017 pig industry, egg and chicken consumption increased 2% yoy. Pig consumption is long and short interwoven, year-on-year flat, or slightly increased by 1%, 3-5 production capacity elimination is not enough, although the current sow storage column compared to the beginning of the year, but pay to ensure the supply of piglets next year;
S6e .　　Cofco Futures Farming Research Group
S6e (COFCO Futures Li Nan Investment Advisory Qualification Number Z0012347)
S6e (COFCO Futures Xiong Guang)
S6e (Cofco Futures Wu Fan)
S6e
this article was first published on September 11 at COFCO Futures Research Center.
S6e
Viewpoint 1: Pig farming has been non-growth industry, the amount of breeding tends to saturate, the scale accelerates, feed enterprises to the downstream layout.
S6e .　　(1) Since 2015, the proportion of domestic per capita pork consumption has declined, and may continue to decline in the future, with pork consumption becoming saturated or slow growth, the pig industry is no longer a growth industry. According to the data of beijing Xinfa land meat wholesale market and the sales of meat products of Shuanghui and Longda meat, the sales of raw frozen pork and meat products are basically saturated.
S6e .　　(2) The two outstanding features of the industry after entering the maturity period are the acceleration of scale and the improvement of production efficiency, the proportion of pig farms on a large scale to increase overlay production efficiency and the continuous improvement of the ratio of meat, making the amount of culture tend to saturate or even slightly lower, while the pork production increased moderately.
S6e .　　(3) In this wave of scale, the breeding sector has attracted financial attention, in addition to the expansion of production capacity of aquaculture enterprises, feed enterprises are also actively expanding downstream aquaculture. Compared with slaughtering enterprises, why is the feed enterprises more obvious to the expansion of breeding? The reason: First, the low concentration of aquaculture, second, the comparison of feed, breeding and slaughtering three links of the benchmark enterprise new hope, mubaration and shuanghui profit indicators of the last 5 years, the gross profit margin and return on net assets of The Makuyuan are better than the new hope feed business, and the double foreign exchange gross margin is more stable, located in between, and the return on net assets performance is excellent, while breeding and feed can form a good synergy.
S6e .　　Point 2: 2017 sow storage column growth, 2018 to capacity strength and time are not enough, next year pig prices are not optimistic, but with the enterprise operating cash flow tight, financing tightening and asset-liability ratio, enterprise expansion and business risk, the pace of expansion will be significantly slowed, the industry expansion rate is expected to improve in 2020 pig supply side, pig price selling expectations.
S6e .　　(1) With the bottleneck of pork consumption growth, the contraction and expansion of the supply side will have a greater impact on the pig cycle.
S6e .　　(2) Referring to the data of the U.S. pig industry, after the scale level has improved significantly, pork prices are still showing cyclical fluctuations, the volatility has not narrowed, but the cycle span has been extended.
S6e .　　(3) The 2017 sow storage data is controversial, from 180 key monitoring feed enterprise data, in 2017 sow and piglet sales increased by 8% and 14.8% year-on-year, respectively, while the purchase price of reserve sows is at a relatively high historical high, overall, the 2017 sow storage column should be the trend of growth.
S6e .　　(4) 2018 pig prices are depressed, from the piglet loss and research situation, the industry to capacity and time are not enough, 2019 pig prices are still not optimistic.
S6e .　　(5) Since this year, aquaculture enterprises have been faced with tight operating cash flow, higher financing costs and tightfinancing financing environment, asset-liability ratio increased situation. Next year pig prices are also difficult to improve, if enterprises continue to expand, capital and operational risks will be improved, so this year's expansion of production capacity is bound to slow down significantly, after 2020 pig supply will improve, pig prices are expected to rise.
S6e
View 3: African swine fever is not a highly contagious disease, it will appear later, but will not affect industry capacity in large areas. African swine fever is non-zoonotic and has a less significant impact on consumption. Before the Spring Festival, pig transfer supervision continued to tighten, in the past 2 years pig production capacity northward shift, the transfer was blocked after the pork region supply and demand contradictions highlighted, the trend of differentiation, the national pig prices continue to be strong.
S6e .　　(1) According to foreign research experience, African swine fever is an man-driven disease, in recent years in Europe frequent outbreaks, African swine fever mainly along the road and railway spread, which is closely related to the movement of people, vehicle transport.
S6e .　　(2) African swine fever is not a highly contagious disease, but has a high fatality rate. African swine fever virus is relatively stable, strong resistance to the environment, in frozen meat can exist indefinitely.
S6e .　　(3) At present, 14 outbreaks have been confirmed in China, and the situation of prevention and control is serious. Epidemic point to small-scale pig farms mainly, the first four outbreaks occurred in the presence of the phenomenon of eating waste feeding pigs, at present, governments at all levels are cleaning up water-fed farmers, while suspending the African swine plague outbreak province pig outside the coordination and closure of the province's pig trading market.
S6e .　　(4) Combined with the characteristics of ASF virus and domestic breeding environment, the later stage is likely to appear, the epidemic will exist for a long time, but compared with 2006-2007 blue ear disease, this round of government response speed is very fast, strong implementation, fighting is prepared. We believe that the probability of large-scale area of the epidemic area is small, the industry capacity will not be greatly affected.
S6e .　　(5) AsF's impact on pig prices:
S6e 1, nearly 2 years of pig production capacity northward shift, the transfer is blocked after the pork region supply and demand contradictions highlighted, the trend is divided;
S6e .　　2, the medium-term view (before the Spring Festival), even if the blockade of the epidemic area lifted, does not mean that the transfer of pigs, the national pig price or continue to be strong.
S6e .　　3. In the long run, we prefer that pig prices in 2019 will be better than previously judged. The reasons are: the rectification of water-fed breeding around the city, the tightening of transportation, the adjustment of production capacity in the northeast region, the increased control of the transfer of pigs and live pigs, and the impact on the small retail supplement column.
S6e
View 4: Feed consumption increased steadily in 18/19.
S6e .　　18/19 Feed consumption increased steadily. Broiler, affected by upstream capacity supply, will remain in a boom cycle next year, similar to the pig industry in 2016, where consumption of broiler materials increased by 5% year-on-year. Egg and chicken stocks are still in the growth stage, next year egg prices will be under supply pressure correction, but the whole year is still above the cost line, similar to the 2017 pig industry, egg and chicken consumption increased 2% yoy. Pig consumption is long and short interwoven, flat year-on-year, or slightly increased by 1%, 3-May production capacity elimination efforts are not enough, although the target.