Since July, there has been a gradual increase in the price of chicken meat, with terminal products such as raw chicken, chicken chicks, and chicken claws and wings continuously rising, which has been widely discussed. At the same time, the prices of upstream products such as chicken chicks and raw chicken wings have also started to rebound. Multiple listed companies in the industry are accelerating their expansion pace and advancing their production layout towards the cooked food sector.
According to data from Zhuochuang, the prices of wings, pipa legs, and chicken feet in the East China market have recently risen to 33.5 yuan/kg, 10.1 yuan/kg, and 33.65 yuan/kg, respectively, up 15%, 17%, and 12% from the beginning of the month.
From the perspective of the entire chicken industry chain, the price fluctuation in the chicken fry link is the largest. Data shows that since July 1st, the average price of chicken fry in China has risen from 1.71 yuan per piece to 3.08 yuan, with a range increase of over 80%. The latest chicken fry prices of listed companies Yisheng and Minhe have reached 4.2 yuan per chicken, an increase of about 56% compared to early July.
Listed companies' orders are in short supply and demand exceeds supply
As product prices rise, orders are also pouring in. The person in charge of Yisheng Co., Ltd. stated that currently the company's parent breeding chickens are priced at 70 yuan per set, and the supply of parent breeding chickens is in short supply. Orders placed before September have been fully booked. The relevant person in charge of Xiantan Stock also told reporters that the prices of the company's cooked food products have recently increased compared to the second quarter. The first phase of prefabricated food production has reached full capacity, and the second phase was completed and put into operation on July 17th this year. The company's prefabricated food production capacity will be further increased.
The chicken concept sector has fluctuated and rebounded, and the price of broiler chickens may rise
In terms of market conditions, as we enter the second half of the year, the chicken concept sector has fluctuated and rebounded, with multiple individual stocks regaining their upward momentum. Among them, Yisheng Shares rebounded by over 12% from its low point in July, Minhe Shares rebounded by over 9%, Shengnong Development rebounded by over 8%, and Xiantan Shares rebounded by over 6%.
It is reported that a core factor in the recent price increase of terminal chicken products is the suspension of poultry exports to China by Brazil, the largest importer of poultry meat in China, due to the outbreak of COVID-19. Due to the fact that Brazilian chicken accounts for nearly 60% of China's imported chicken, the prices of chicken products in the end market have rapidly increased after Brazil suspended exports. In this context, the slaughter process has increased its efforts to purchase raw chickens, and the prices of raw chickens have also skyrocketed, with a cumulative increase of over 10% in the past half month. According to calculations by Shanghai Steel Union, the current feed prices are relatively low, coupled with the rise in raw chicken prices, the breeding end of white feathered chickens has achieved a turnaround from losses to profits.
The person in charge of Yisheng Shares stated that on the other hand, the improvement on the demand side has also brought benefits to the industry. "In the third quarter of each year, there are barbecue season, school opening, Mid-Autumn Festival, National Day and other festivals and holidays, which are usually peak consumption seasons, and will drive the price of chicken to rise, thus driving the raising enthusiasm of chicken farms and increasing demand for commercial chicken seedlings."
Zhuochuang Information believes that from the second half of this year, from July to August, with increased demand and relatively limited supply, the market may show a weak supply and strong demand state, and the price of broiler chickens may rise. By the fourth quarter, market demand will slightly weaken, coupled with an increase in sales volume, and chicken prices may fall. Due to the impact of supply and demand in the second half of the year, it is expected that chicken prices will rise first and then fall.
The profit margin of broiler farming is expected to expand, and listed companies are accelerating their expansion pace
According to Xiantan Shares, the company's annual production of 120 million broiler chickens is part of its ecological project. The first phase of the project includes the construction of a slaughter and processing plant, feed mill, and 21 breeding farms, all of which have been put into production. The slaughterhouse and processing plant for the second phase of the project has been completed, and the equipment is currently being installed. After the project is fully completed and put into operation in 2024, it will achieve full support for parent and commodity generations. The company's broiler slaughter capacity will reach 250 million to 270 million, and the meat processing capacity will reach 700000 tons. Yisheng Co., Ltd. also stated that it will continue to expand the scale of raising parent broiler chickens in the future, and the sales of the company's product broiler seedlings will increase.
It is worth noting that breeding enterprises are also increasing their layout in the field of pre packaged cooked food with higher added value.
The relevant person in charge of Xiantan Stock introduced that the company focuses on the end consumers of new retail and new channels, and tends to develop categories such as light food convenience and efficient meal delivery that meet the needs of consumer terminals, actively researching and developing diversified products. The company keeps up with the trend of the prefabricated food market and has now produced a variety of exquisite small packaging products such as Overlord pistol legs and pan fried chicken cutlets. In addition, the company's sales channels are no longer focused on traditional tracks, but are transforming into various emerging diversified sales tracks such as chain restaurants, group meals, convenience stores, and online channels.
Fangzheng Securities believes that the Baiyuji sector has a weak market due to sufficient short-term production capacity. However, based on the semi annual report, Baiyuji enterprises have achieved certain profits in the sluggish market by balancing the impact of some market fluctuations through integrated upstream and downstream operations. And upstream seed source companies still maintain their core competitiveness, with seed prices still profitable. In the second half of the year, with the recovery of demand and the reduction of import volume on the supply side, the market for white feathered chicken will rebound to some extent.
