Gf Securities released a research report stating that recent increases in bulk raw material prices have led feed enterprise groups to raise feed prices. During periods of rising bulk raw material costs, the advantages of large feed enterprises in procurement, technical formulations, and inventory management become more pronounced, thereby securing profit margins on feed sales. The report maintains a positive outlook on leading companies' continued market share growth in China, supported by their comprehensive advantages. Regarding the pig farming segment, producers are currently experiencing deep cash flow losses, and rising feed costs are further intensifying cash flow pressures on farmers. Deep industry losses, combined with policy adjustments and disease disruptions, are expected to lead to effective and rapid capacity reduction, with a new industry cycle gradually taking shape. Sector valuations are currently at relatively low levels, making cost-advantaged leaders the preferred investment choice. Key views from Gf Securities are as follows:

Corn and fishmeal prices have increased significantly since the beginning of 2026. According to Wind data, on April 10th, the spot price for corn was 2,432 yuan per ton, up 3.4% since the start of the year; the spot price for soybean meal was 3,082 yuan per ton, down 2.8% since the beginning of the year; and the price of fishmeal was 16,450 yuan per ton, up 18.8% since the start of the year. The rise in bulk raw material prices has prompted feed enterprise groups to recently increase feed prices. Therefore, this report focuses on the recent increase in bulk raw material prices and analyzes its impact on related enterprises in the breeding industry chain.

During periods of rising bulk raw material costs, compared to small and medium-sized feed enterprises, the advantages of large feed companies in procurement, technical formulation, and raw material inventory management are amplified, helping to protect profit margins on feed sales. In terms of procurement models, large feed enterprises generally have well-established procurement control processes. Leveraging their scale, they possess strong bargaining power and resource integration capabilities in raw material purchasing. Furthermore, large feed companies commonly use hedging instruments for bulk raw materials to mitigate the risks associated with price fluctuations. Regarding formulation technology, due to their extensive reserve of formulation solutions, large feed enterprises can dynamically adjust recipes based on raw material price movements during periods of rising costs. This flexibility allows them to maximize nutritional value while controlling expenses.

Feed cost constitutes the most significant expense in pig farming, accounting for approximately 60% of the total cost. Rising bulk raw material prices will lead to increased pig farming costs. It is anticipated that the impact of rising prices for materials like corn in the first quarter will gradually be reflected in the cost of market-ready hogs in the second half of the year. According to the bank's calculations, a 200 yuan per ton increase in corn prices corresponds to an approximate rise of 0.3 yuan per kilogram in pig farming costs; a 200 yuan per ton increase in soybean meal prices corresponds to an approximate increase of 0.06 yuan per kilogram in farming costs. The pig farming industry is currently in a state of deep losses, with the national average pig price falling below 9 yuan per kilogram. The increase in feed costs further exacerbates cash flow pressure, widening the extent of cash flow losses across the entire industry.

Risk warnings include fluctuations in pig prices, volatility in raw material costs, disease risks, and food safety issues.