CMSC has released a research report suggesting that the sector is building momentum for an upward cycle, highlighting investment opportunities at a low point. Looking ahead to the second half of 2026, investment opportunities in the agriculture, forestry, and animal husbandry sector are expected to focus on two main dimensions: cyclical and growth. Firstly, regarding the cyclical aspect, the industry continues to experience deep losses, and policies aimed at curbing excessive internal competition are being strengthened, potentially accelerating the reduction of sow production capacity. Meanwhile, the import volume of grandparent breeding chickens has declined year-on-year, indicating favorable prospects for the upstream breeding segment. Secondly, on the growth front, the significant year-on-year increase in fishmeal prices may allow leading feed enterprises to gain market share against the trend. Furthermore, dominant domestic feed companies are expected to maintain their strong positions and potentially replicate their mature domestic competitive models in overseas markets, thereby unlocking new growth potential. The main views of CMSC are summarized as follows.
The industry is experiencing deep losses, and policy support is increasing, which is expected to accelerate the reduction of sow production capacity. Pig farming enterprises with advantages in cost control, disease prevention, and financing are likely to navigate the cycle successfully and fully realize profit elasticity during periods of rising pork prices. Leading domestic feed companies are expected to strengthen their positions, with their value attributes becoming increasingly prominent. Expanding overseas could open up new growth avenues. The industrialization of biological breeding is advancing actively, and leading seed companies with core variety advantages are expected to see an accelerated increase in market share.
Pig Farming: Deep Industry Losses and Policy Support Push Capacity Reduction into a Critical Phase
The dual pressures of deep industry losses and strengthened policies against excessive competition may lead to a seasonal rebound in pork prices in the second half of 2026. However, significant supply pressure remains, and high slaughter weights may limit the extent of any price rebound. As the period of deep losses extends further, an acceleration in the reduction of sow production capacity is anticipated, which could further raise expectations for future pork price increases. Variance in farming costs across the industry remains high, with cost advantages for high-quality leading pig enterprises still solid. Capacity reduction will not happen overnight. Enterprises with strengths in cost, disease control, and financing are positioned to endure the cycle and fully leverage profit elasticity during upward price trends.
Post-Cycle: Leading Companies Gain Market Share Against the Trend; Monitor Sub-Segment Prosperity
In the feed sector, against the backdrop of significantly rising fishmeal prices, leading feed enterprises with technological advantages are favored to increase their market share despite challenging conditions. The domestic feed industry is entering a phase of accelerated consolidation, with a clearer competitive landscape where the strong get stronger. The peak period for capital expenditure among leading domestic feed companies has passed. Growth in feed sales volume may lead to a notable improvement in depreciation per ton, driving profit realization and highlighting value attributes. Simultaneously, leading feed companies have the potential to replicate their successful domestic competitive models in overseas markets, creating new growth space. In the animal health sector, competition remains intense, but companies with superior product capabilities are expected to see a率先 repair in profitability. The progress of leading animal health companies in deploying major product lines warrants attention.
Poultry Farming: Prosperity in White-Feathered Breeding Segment; Yellow-Feathered Chickens May See Profit Release in 2026
1) White-Feathered Chickens: The import volume of grandparent breeding stock into China declined by over 10% year-on-year in 2025. Coupled with avian influenza outbreaks in France during November-December 2025, the supply of imported breeding sources has been under pressure since the beginning of the year. This is expected to support high prosperity in the parent breeding stock segment in 2026, subsequently affecting the supply of commercial day-old chicks. The upstream breeding segment is viewed favorably.
2) Yellow-Feathered Chickens: The current inventory of parent breeding stock has fallen to historically low levels. Additionally, with the industry experiencing losses for over half a year in 2025, supply contraction lays the groundwork for future price increases. The yellow-feathered chicken segment entered an upward prosperity channel starting Q4 2025, and with declining feed costs, high prosperity is expected to continue into 2026. High-quality poultry enterprises may see profit realization.
Seeds: Favorable Corn Price Trends Support Sentiment; Transition to Normalized GM Cultivation
Domestic corn prices have shown a slight recovery since the beginning of the year, which may boost farmers' planting enthusiasm. The supply-demand dynamics in the corn seed industry are improving. Amid frequent extreme weather events, high-quality, stress-resistant corn varieties are in short supply. Furthermore, with genetically modified (GM) corn and soybeans entering a stage of normalized nationwide cultivation, leading seed companies with core variety advantages are expected to experience an accelerated increase in market share.
Risk warnings include greater-than-expected fluctuations in agricultural product prices, lower-than-expected sales volumes/costs for listed companies, slower-than-expected commercialization of GM technology/non-african swine fever vaccines, outbreaks of uncontrollable diseases, and major food safety incidents.
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