League of Nations Minsheng Securities: Focus on pig production capacity to remove El Niño to reshape the supply of agricultural products
The Zhitong Finance App learned that Guolian Minsheng Securities released a research report saying that as of the end of the first quarter of 2026, the number of sows that can be raised in China was 39.04 million, which is still higher than the newly revised normal holding target of 37.5 million heads. It is in the “yellow zone” of production capacity, but the trend of elimination is clear. Along with the slump in pig prices, downstream pig price prospects gradually turned pessimistic, and the willingness to fill in the column weakened, causing piglet prices to continue to fall, while piglet prices directly affect sow breeding profits, affect breeding intentions on the breeding side, and may lead to the accelerated loss of sow production capacity.
The main views of the League of Nations Minsheng Securities are as follows:
Cow farming
The bank believes that the beef cattle breeding industry is similar to the pig breeding industry, and also conforms to the cobweb model, and due to the relatively low concentration of beef cattle breeding and serious information asymmetry, this is very similar to the pig farming industry before the outbreak of African swine fever. This means that losses and loss of production capacity over a long period of time may lead to large differences in expectations and price elasticity in the later stages. If the bank compares the prices of beef and raw milk on a long-term basis, compared to pork, the two have a stronger degree of coincidence in terms of long-term trends. When beef prices rise, farms can sell dairy cows as fattening cows, leading to a decrease in the supply of raw milk in the market, and ultimately achieving a linkage effect on milk prices.
poultry farming
In the first half of 2026, the white feather broiler industry faced a situation where overseas breeding was completely interrupted. The renewal of ancestral chicken breeding mainly depended on domestic self-breeding, leading to a significant year-on-year decline in overall breeding volume. As of the 21st week of 2026, the number of ancestral chicken stocks reached 1.629,600 units, an increase of 19.2% over the previous year, the highest level since 2019. Affected by the cutoff in overseas introduction, the cumulative number of ancestral renewals decreased by 20.67% year on year from January to May 2026, but the number of domestically produced self-breeding varieties updated increased sharply by 75.80% year on year, effectively filling the import gap, and there will be no sharp decline in support stocks. Combined with the official resumption of ancestral breeding from abroad in June, the number of ancestral chickens produced will remain high throughout the year.
agricultural products
Palm oil: Looking ahead to 2026, global palm oil supply and demand are in a balanced but weak state. Indonesia's production is expected to decline slightly in 2026. Malaysia is constrained by insufficient new cultivation area and labor shortages for a long time, so there is very limited room for supply growth. Although short-term production areas are in the traditional production increase season, there is significant industrial demand support. Indonesia will officially implement the B50 biodiesel policy in July, further increasing demand. However, Indonesia and Malaysia, as the core production areas of palm oil, happen to be at the core of the drought caused by El Niño, which may cause production to decline after 8-10 months. Sugar: In 25/26, the world's main sugar producing countries produced a lot, and sugar prices fell all the way down. Domestic sugar production has increased for three consecutive years. Affected by the continued slump in overseas sugar prices, the current additional import profit for Brazilian sugar is more than 500 yuan/ton. The generous import profit has attracted a large amount of sugar imports, further causing pressure on domestic supply. In May 2026, the International Sugar Organization (ISO) released its latest forecast, which estimates global sugar production for 2026/27 at 180 million tons, a year-on-year decrease of 1.1%, and a global sugar supply gap of 262,000 tons. The main reason is that the El Niño climate may have an impact on sugar cane harvests in India and Thailand, and also incorporates variables that drive Brazilian sugar mills to switch more sugar cane to ethanol production, waiting for the transformation of the bull and bear pattern in the sugar market.
Investment suggestions: Pig breeding suggestions focus on Muyuan Co., Ltd., Wen's shares, Dekang Agriculture and Animal Husbandry, Tiankang Biotech, etc., while suggestions for cattle breeding focus on excellent animal husbandry and modern animal husbandry.
Risk warning: the risk that pig production capacity will fall short of expectations; the risk that herd production capacity will fall short of expectations; the risk of poultry farming epidemics and introduction; the risk of large fluctuations in agricultural product prices; increased risk of domestic market competition, etc.