The poultry industry rebounded, and the chicken sector continued to strengthen

The chicken sector has continued to strengthen
in recent times.
Huatong shares, Yisheng shares, Xiantan shares, and Minhe shares rose and stopped on October 10, and Xiaoming shares rose by more than 18%.

On October 12, Huatong and Yisheng both issued announcements on abnormal fluctuations in stock trading, saying that the company's closing price increase deviation for three consecutive trading days exceeded 20%.

On October 17, the chicken sector continued to rise, as of the midday break, Hefeng shares were up and down, Minhe shares, Shengnong Development, Xiangjia shares, Lihua shares, etc.
all rose
.

Affected by the outbreak of international avian influenza, the reduction of production capacity, good consumer demand, and the strengthening of pork prices, the market of yellow feather broiler and white feather broiler has picked up since the second quarter of this year, and the level of corporate profitability has improved
.
The industry expects that white-feathered broilers will show a trend of "slow increase in production and price shocks", which is expected to be profitable throughout the year, and the yellow-feathered broiler cycle has also opened an upward channel
.

The poultry industry has rebounded

On the news, this round of chicken sector rally is related to
the international avian influenza outbreak.
According to the latest data from the European Centre for Disease Control and Prevention and the European Union Reference Laboratory, cases of highly pathogenic avian influenza disease (HPAI) were detected in wild birds and poultry in Europe from June to September this year, and 47.
7 million birds were culled
.
So far this year, more than 47 million birds in the United States have died of bird flu or been culled, close to an all-time high
.

AVIC Securities Research Report on September 24 believes that the improvement of broiler supply and demand fundamentals, coupled with the catalytic market of foreign avian influenza, the industry is expected to pick up
.
On the supply side, the production capacity of yellow feather broilers has a clear
trend.
The inventory of parent generation breeders has dropped to the lowest level in the past three years, and the number of grandparents and parents will reach a peak in 2020, 1.
5346 million sets and 43.
022 million sets respectively.

On the demand side, the improvement of the epidemic and the warming consumption are expected to boost the demand for
broilers.
The live poultry ban policy has been digested, and the trend of chilled consumption has increased
.
The strengthening of pork prices will also improve the cost performance of poultry consumption, and consumption substitution or enhance the prosperity of
the broiler industry.

Combined with the sales data of several major listed companies, Lihua Co.
, Ltd.
sold 36.
7683 million broiler chickens in September 2022, with sales revenue of 1.
366 billion yuan, and the average sales price of hairy chickens was 18.
66 yuan / kg, with month-on-month changes of 4.
07%, 10.
34%, and 4.
66%, and year-on-year changes of 5.
61%, 50.
09% and 40.
51%
respectively.
Lihua shares mainly attributed the increase in revenue to the improvement of market supply and demand, and the market rebounded
.

In the same month, Xiangjia Co.
, Ltd.
sold 3.
9689 million live birds, with sales revenue of 113.
6029 million yuan and an average sales price of 15.
86 yuan / kg, with month-on-month changes of 5.
81%, 12.
01% and 5.
42%, and year-on-year changes of 34.
07%, 81.
55% and 31.
27%
respectively.
Xiangjia said that in September 2022, the company's live poultry sales quantity, revenue and average price increased significantly year-on-year, mainly due to the improvement of market supply and demand, and the prosperity of the entire poultry industry further rebounded
.

The broiler industry has picked up since the second quarter

According to the financial reports of listed companies, the market for yellow feather broiler and white feather broiler has picked up
since the second quarter of this year.

According to the semi-annual report of Lihua shares, the yellow feather broiler is a broiler breed independently bred in China, which has the characteristics
of a wide variety of varieties, long growth cycle and high price.
Affected by factors such as the expansion of industry capacity in the second half of 2019, the impact of the new crown pneumonia epidemic on consumption in 2020, and the low pig price in 2021, the market of yellow feather broilers was in a downturn from 2020 to 2021, and the industry's production capacity continued to go down and supply contracted
.
In May 2022, the yellow-feathered broiler cycle opened an upward channel, and the price of chickens increased significantly, showing the characteristics of
a low season in June.

According to Shengnong Development, chicken is the second largest consumer meat in China after pork, of which white feather broiler accounts for more than half of the market share
.
In the first half of 2022, in the entire white-feathered broiler industry chain, except for the commercial breeding link, the rest of the links are in a state of loss, and the production capacity continues to decline
.

The long-term low price has led to more capacity reduction in the industry, and the supply of chicken seedlings has shown a downward trend
.
According to statistics from the China Animal Husbandry Association, from January to July 2022, the renewal of ancestral white-feathered broiler breeders in China decreased by 23.
5% year-on-year, the supply of parent broiler chicks decreased by 7.
5% year-on-year, and the supply of commercial chicks decreased by 12%
year-on-year.
In addition, avian influenza has occurred in several countries since April this year, and the General Administration of Customs has issued the List of Animals and Their Products Prohibited from Countries and Regions Where Animal Diseases Are Endemic.

Industry data shows that from May to July 2022, the number of overseas seeds introduced in China was zero, and the cumulative number of seeds introduced from January to July was about 468,500 sets, down 26.
95%
from the same period of the previous year.

Affected by the above series of factors, since late March this year, the price of commercial substitute white feather broiler fry has begun to fluctuate and rise
.
With the industry's capacity reduction, consumption recovery and pig prices rising, chicken prices in the second quarter increased
significantly from the previous quarter.
Yisheng's loss in the second quarter narrowed significantly compared with the first quarter, and Sunner Development's operating performance improved significantly in June and achieved profitability
.

Since domestic self-breeding is not enough to make up for the shortfall, considering the uncertainty of ancestral introduction, Sunner Development expects that the supply of white-feathered broiler ancestral breeders or shortages in the future will be sufficient, and the supply of subsequent parent and commercial chicken seedlings will decrease accordingly, driving the price of chickens to rise
.
Yisheng shares also expects that the improvement of the epidemic and the increase in consumer demand will drive the price of chicken and chicks to rise, and the rise in pork prices will also be positive for chicken prices
.
Judging from both supply and demand, the market of white feather broiler chickens in the second half of the year will be significantly better than the first half
.

Zheng Maiqing, chief analyst of the broiler production detection and early warning expert group of the Ministry of Agriculture and Rural Affairs, publicly analyzed that the supply and demand of white-feathered broilers are in a delicate balance, the prices of chicken, hairy chickens and breeders in production and inventory are only slightly fluctuating, and changes in feed prices and consumer demand are the main influencing factors; Lower feed prices will increase production and chicken prices will fall; Overall, the follow-up situation is a trend of "slow increase in production and price shock", and it is expected to be profitable
throughout the year.
The market of yellow feather broilers continued to improve, production increased, and production income was better
.