The Paper reporter Tian Zhongfang [Editor's note] In the first half of 2022, domestic and foreign macro hot spots frequently emerged. The A-share market first declined and then rose, popular tracks were deeply adjusted, and market styles switched dramatically. Entering the second

The Paper reporter Tian Zhongfang

[Editor's note]

In the first half of 2022, domestic and foreign macro hot spots frequently emerged. The A-share market first declined and then rose, popular tracks were deeply adjusted, and market styles switched dramatically.

Entering the second half of 2022, how will the capital market perform? Starting from July 4, The Paper and Wall Street Insights will jointly launch "The Road to Revitalization of the Economic Market" - "Chief Connection" 2022 Mid-term Market Outlook Series Live Broadcast, with well-known chief economists and industry analysts Teachers met face to face to make an outlook on the macroeconomics, market trends, and industry configuration in the second half of the year.

What this issue publishes is a conversation with Zhao Jinhou, Managing Director of Shenwan Hongyuan Research Institute, Director of Consumer Products Research Department, and Chief Analyst. Zhao Jinhou has been engaged in the analysis of the agriculture, forestry, animal husbandry and fishery industry and listed companies for 25 years. He is currently one of the most senior industry analysts in the Chinese securities market. Not only does he have a good understanding of the development history and trends of China's agricultural industry, but he is also quite familiar with the actual conditions of each sub-industry and the fundamentals of related listed companies. Zhao Jinhou is the first "Platinum Analyst" of " new wealth ".

The prosperity of the agricultural sector is expected to continue to rebound in the second half of the year.

Zhao Jinhou said that in the first half of this year, the agricultural sector performed well overall. Driven by the two hot spots of rising international food prices and the pig cycle, the market was good.

"What will happen to the agricultural sector in the second half of the year? We mainly need to pay attention to whether the factors that supported the strength of the agricultural sector in the first half of the year will change." Zhao Jinhou said.

Zhao Jinhou pointed out that the first thing is food prices, and it is also necessary to distinguish between international food prices and domestic food prices, because the driving factors and logic behind the two are different. There are many factors affecting international food prices. Among them, from the perspective of supply and demand, it does not support a large-scale and sustained rise. It should be said that the probability of a pullback is higher.

"Domestic food prices are not entirely determined by supply and demand. my country's food policy plays a very important role in the mid- to long-term trend of domestic food prices. In general, although in the short term, domestic food prices will rise to a certain extent There will be periodic fluctuations due to the impact of international prices, but the overall trend is still rising," Zhao Jinhou said.

Regarding pig prices, Zhao Jinhou said that there is not much difference in the logic of judging pig prices and grain prices, and they are also determined by supply and demand. However, the game of slaughtering and breeding has been added to the price of pigs. Because pigs can be used to hold the stalls or be sold in advance. Generally speaking, after moderate consolidation in the future, pig prices will continue to rise, but the pace of rise is uneven.

"In the second half of the year, as the fundamentals of the industry continue to recover, the industry as a whole is expected to shift from losses to profits, and from less profits to more profits. Next, the main focus of the agricultural sector will be the recovery of the industry's prosperity." Zhao Jinhou pointed out.

International food prices are affected by many factors such as supply, demand, and currency. Soybean prices will be under pressure in the next step, Wheat prices will still be supported.

In terms of international food prices, Zhao Jinhou pointed out that the three major elements of supply, demand, and currency, together constitute The fluctuation system of international food prices has been established.

"Specifically, the international food price is mainly the price of international trade , and the main factors affecting the supply of the main producing countries include geopolitical conflicts in the main producing countries, local weather, export restrictions of exporting countries, international oil prices, etc. Among them, there are two ways in which international oil prices affect grain prices. One is to increase the cost of agricultural inputs and fertilizers, and the other is to bring about changes in supply," Zhao Jinhou said.

Zhao Jinhou explained that for example, as international oil prices rise, the demand for ethanol fuel and other fuels will increase. More corn and sugar cane will be used to produce fuel ethanol , and theoretically the supply of food will decrease.

"In terms of demand, overall consumption increases with the increase in population. Although the global population is currently increasing moderately, from the perspective of international trade, once prices rise, each country will have a negative impact on its future food imports. If there are concerns about the guarantee, imports will increase and stocks will be quickly replenished, which will also affect international grain prices in stages," Zhao Jinhou further pointed out.

In terms of currency, Zhao Jinhou said that currently there are futures prices for major international agricultural products. The loose money market and inflation expectations, combined with the support of adverse weather, will push up the futures prices of agricultural products, including grain futures prices, and fluctuations in the futures market will in turn affect Spot goods.

"In general, supply, demand, currency and other factors have comprehensively promoted the rise and fall of international food prices. However, the core basis is the fluctuation of supply and production." Zhao Jinhou emphasized.

Looking forward, in terms of specific varieties, Zhao Jinhou believes that the important factor affecting soybeans is reduced production. The decline in soybean planting area in the United States the year before last resulted in a reduction in production, while last year it was mainly due to drought in South America. This year, the market generally predicts that the sown area will increase. Therefore, if no major natural disaster occurs, the supply of soybeans will increase. Therefore, from a supply perspective, the price of soybeans should move downward from the high level.

"In terms of corn, overall production will increase. Corn production has not decreased in recent years, and prices have been largely driven by rising oil prices." Zhao Jinhou said.

Regarding wheat, Zhao Jinhou pointed out that the rise in wheat prices was mainly caused by overseas geopolitical conflicts. The inventory could not be turned into effective supply, resulting in a reduction in supply in international trade and pushing up prices. At present, although the stocks in relevant countries are expected to be released to a certain extent, wheat production will definitely decrease in the new planting year. Therefore, wheat prices remain supported.

Domestic food prices are stable and rising

Regarding domestic food prices, Zhao Jinhou said that the analysis logic of China's food prices is different from that of international food prices, because China's food prices are not entirely determined by supply and demand.

"my country's food policy will play a very important role in the mid- to long-term trend of overall domestic food prices." Zhao Jinhou pointed out.

Zhao Jinhou said that China has achieved bumper grain harvests for 18 consecutive years, and last year’s grain output was also very sufficient. From a supply perspective, there is no shortage of food in the country, especially rations. Such as wheat, rice, etc., which are absolutely safe and have sufficient stocks. Therefore, from a supply perspective, there is no reason for domestic food prices to rise significantly.

"However, in fact, my country's food prices have been rising since 2004. On the one hand, there are continuous bumper harvests, and on the other hand, the continuous increase in food prices. The most important influencing factor is the government's price guidance." Zhao Jinhou said.

Zhao Jinhou pointed out that our country now implements a minimum purchase price for food rations. The so-called minimum purchase price means that the country will open the purchase at the relevant price, setting the bottom line of the market price, highlighting the country's emphasis on and support for agriculture, rural areas and farmers. At present, our country attaches unprecedented importance to food, especially rations.

"At the same time, as the cost of growing grain has also increased in recent years, whether it is the cost of transferring land or the cost of labor, this has led to a decline in farmers' grain-growing benefits to a certain extent. Therefore, in order to ensure the planting area of ​​grain "To ensure farmers' enthusiasm for grain cultivation, we must ensure reasonable profits from grain cultivation. In addition to subsidies, it also requires a moderate increase in grain prices," Zhao Jinhou said.

Therefore, next, Zhao Jinhou judged that although domestic food prices may be affected by international food prices in the short term and experience periodic fluctuations, the overall trend is still rising steadily.

"It should be pointed out that since the increase in food, especially rations, will have an impact on residents' living standards, it is impossible to increase significantly. The increase must be moderate." Zhao Jinhou emphasized.

Domestic food prices, especially ration prices, will be relatively independent.

Regarding the synchronization of domestic food prices with international food prices, Zhao Jinhou said that this aspect involves the issue of dependence on food imports.

"So, from the perspective of rations, I think domestic prices will not be synchronized with international prices, and domestic ration prices are relatively independent." Zhao Jinhou pointed out.

Zhao Jinhou further pointed out that because domestic soybean imports are large and soybean price dominance is international, domestic soybean prices may be in sync with international prices.

The rise in food prices will benefit the seed sector to a certain extent, and the competitiveness of seed companies with strong scientific research capabilities is expected to further moderately improve

In terms of food security, Zhao Jinhou emphasized that, in essence, the food crisis refers to how many people can afford food.

"From the perspective of population and purchasing power, the rise in food prices has caused more people to be unable to afford food, and then a food crisis has occurred, causing more people to need assistance. Therefore, it is the rise in food prices that aggravates the food crisis, not the food crisis It triggered a rise in food prices," Zhao Jinhou pointed out.

In the next step, food prices will generally rise steadily. Therefore, from the perspective of the industrial chain, rising food prices are unfriendly to its downstream industries, including feed and food processing, food manufacturing, breeding, etc., which all have rising costs. Unless the relevant costs can be passed on, its profitability will inevitably be compressed to a certain extent.

"For the seed industry, an important positive logic is the rise in grain prices. Because in the A-share market, there are not many related targets for grain planting, the seed sector is a natural beneficiary." Zhao Jinhou said.

However, Zhao Jinhou also emphasized that the benefits of rising food prices to the seed sector still need to be viewed dialectically.

"On the one hand, as food prices rise, the enthusiasm for food planting increases and the sowing area increases, which brings about an increase in demand for seeds. But on the other hand, because the main business of China's seed companies is mostly outsourcing, that is, the model is to Since the farming land is contracted, farmers will be given corresponding funds for planting per acre. Therefore, as grain prices rise, farmers will have new requirements for income and more expenses. This will create macro-economic demands for seed companies. will increase, but the cost of self-planting will also increase," Zhao Jinhou said.

Zhao Jinhou further pointed out that the current genetically modified policy will have a greater impact on the pattern of the planting industry, especially the seed sector, which will bring about major changes in the industry.

"Currently, genetically modified seeds are mainly divided into two categories, one is insect-resistant and the other is herbicide-resistant. Insect resistance can save costs such as pesticides and indirectly increase yields. Herbicide resistance increases weeding efficiency," said Zhao Jinhou.

Zhao Jinhou said that the advancement of science and technology has changed the overall production method and production model of the planting industry. Therefore, in the upgrading and upgrading of the seed industry caused by genetic modification, industry concentration will tilt towards seed companies with greater scientific research strength, and their competitiveness and market share are expected to be further moderately improved.

The rise in pig prices is mainly affected by the supply side. After the next step of moderate consolidation of pig prices, it will continue to rise.

In terms of pig prices, Zhao Jinhou said that the judgment of the pig price cycle is, first, a hot spot for the market to pay attention to. The biggest influencing factor in the field of pig breeding in recent years is African swine fever.

"It appeared sporadically in November 2008 and then fully dispersed in the first half of 2019, which directly led to the subsequent shortage of pork. Subsequently, the industry began to recover rapidly. It evolved into June last year when the industry began to reduce production capacity." Zhao Jinhou said.

Zhao Jinhou pointed out that pig breeding and pig prices can be viewed from a more macro perspective.

"First of all, the price of pigs is the same as the price of grain. Supply and demand determine the price. Of course, since pigs can be put on the pen or sold in advance, the evolution of pig prices has included the game of slaughtering and breeding." Zhao Jinhou said.

Zhao Jinhou pointed out that in general, pig price fluctuations are actually the most sensitive to fluctuations in supply. Specific to this round of fluctuations, on the one hand, with the nationwide spread of the African swine fever epidemic in 2019, the entire pig production capacity has decreased sharply. On the other hand, as pig prices rose, the state took measures to encourage breeding. By June 2021, the number of reproductive sows reached a high level, and the industry began to reduce production capacity.

At present, the rise in pig prices is mainly caused by three factors. First of all, on the supply side, the effect of the reduction of reproductive sows last year began to be transmitted. In January this year, the number of piglets born began to decrease. This has further translated into the fact that the current slaughter volume of commercial pigs has also dropped to a higher level month-on-month.

"Secondly, on the sales side, the number of live pigs sold in the first quarter is still very high. However, because the market is expected to drop pig prices before the Spring Festival, it has caused a periodic reduction in pork supply. Superimposed on the national purchase and reserve, although the volume is not large, it is further reducing supply."Zhao Jinhou pointed out.

Zhao Jinhou said that in this case, pig breeding companies and farmers are optimistic about the short term, so they will be reluctant to sell and suppress the stalls, which will lead to a reduction in supply. In such a game, the price of pigs also appeared." One price a day."

"Next, whether it's to push the bar or to be reluctant to sell, there is always a sale. As the weather gets cooler in the future, increased consumption will boost demand for pork, but it will take time for slaughter volume to pick up. Therefore, after the current early rise in pig prices, there may be a moderate correction in the future. But after the consolidation, the price will continue to rise upward. At the same time, under the influence of pressure and reluctance to sell, the pace of rise will be uneven. " Zhao Jinhou judged.

The initiative to reduce overcapacity is coming to an end.

In terms of overcapacity reduction, Zhao Jinhou said that the logic of overcapacity reduction in the pig breeding sector in May was somewhat lower than expected, mainly due to the influence of two factors.

"On the one hand, it is because of the pig production. The amount of investment and financing in breeding is very large, and the digitalization and intelligence requirements of modern pig farms are very high. The production capacity in this area cannot be withdrawn casually like free-range farming. Therefore, these capacity additions will not be until at least the end of this year. "Zhao Jinhou said.

On the other hand, Zhao Jinhou pointed out that in 2020, domestically imported pigs hit a record high and were successively invested in the production process. Therefore, from the perspective of piglet protection, production capacity is also being upgraded.

"This year 5 After months, the number of reproductive sows has stopped declining. It can be said that the initiative of enterprises to reduce production capacity is coming to an end. "Zhao Jinhou said.

The rebound in pig prices and improvement in profits are deterministic expectations. The fluctuation range of pig prices in the future will be appropriately smoothed.

In terms of investment in the pig breeding sector, Zhao Jinhou believes that in the future, related investments will not be made entirely according to the logic of the cycle.

“Currently, many pig breeding companies are extending the industrial chain, and the terminal may be food companies. Therefore, there will be no great isolation in the industrial chain links, and there will be fewer games between them. " Zhao Jinhou pointed out.

Zhao Jinhou further pointed out that with the rise of some large-scale pig breeding enterprises, it will be increasingly difficult for new companies to enter the leading echelon against the background that the industry is becoming more and more capital- and technology-intensive.

"Therefore, , after pig breeding achieves leapfrog development in this round of capitalization and scale-up process, the industry concentration will further increase in the future, and the fluctuation range of pig prices will also be appropriately smoothed. "Zhao Jinhou said.

In general, the continued recovery of pig prices and improvement in profits in the pig breeding sector are a certain expectation. The overall outlook for the pig breeding sector in 2022 is positive.

The pet food track has a relatively bright future Good but fierce competition, chicken, eel breeding, etc. are expected to recover.

In terms of investment, Zhao Jinhou said that this year is the 30th anniversary of the founding of Shenwan Hongyuan Research Institute, which has benefited from the deep research foundation, brand advantages and persistence accumulated over the years. Establishing long-term mutual trust relationships with customers, it currently has a securities research service team of more than 300 people, and its research covers 900 domestic and overseas listed companies.

"In multiple research fields, Shenwan Hongyuan Research Institute has built a full-cycle talent pool. The training system includes a full series of talent development outlines, a comprehensive training curriculum framework, phased training projects, a teaching system, a supporting talent development guarantee system, and a competitive mechanism for promotion and promotion, laying a solid foundation for the sustainable development of the team and training for the industry. We have recruited many investment research professionals. " Zhao Jinhou said.

As far as the subdivision of agriculture is concerned, Zhao Jinhou pointed out that it is undeniable that pet food has been a relatively good track in the past two years, with huge consumption and market space, but the competition is also fierce.

" At present, there is no absolute leader in the pet food industry. In the future, the competitive advantages of relevant enterprises with a relatively good industrial foundation and the support of overseas export business are expected to be further highlighted. As for a marketing brand built entirely on capital, if there is no follow-up financial support, there is a high probability that it will be liquidated and exited. " Zhao Jinhou said.

At the same time, Zhao Jinhou pointed out that chicken prices are also expected to recover after being depressed for a long time.At the same time, eel farming also deserves attention.

"In addition, the promotion of genetically modified seeds and the development of new African swine fever vaccines in animal vaccines are events that will have major changes in the industry and also contain certain investment opportunities."

Zhao Jinhou (Qualification Number: A0230511040007) Mainly Opinion based on report: "Focus: Rising prices drive performance growth - 2022 mid-term investment strategy for the agriculture, forestry, animal husbandry and fishery industry", June 30, 2022

Responsible editor: Zheng Jingxin Picture editor: Shi Jiahui

Proofreading: Luan Meng