Following the Politburo meeting on July 30, which called for stabilizing hog and other livestock product production and prices while boosting farmers' incomes, Guotai Haitong Securities released a report emphasizing the growing importance of hog production capacity regulation. The broker noted that hog and piglet prices rose early in July but fell later, with self-breeding and self-slaughtering operations facing losses for a tenth consecutive month, driving ongoing capacity reduction. Concurrently, high temperatures may impact corn growth, benefiting stress-resistant seed varieties, while the August Asia Pet Expo could catalyze the pet segment. The report recommends focusing on opportunities across breeding, planting, and pet sectors.

Key Insights from Guotai Haitong Securities:

Hog Sector: Politburo Continues to Focus on Hog Prices

The July 30 Politburo meeting highlighted the need to stabilize hog and livestock product production and prices to ensure stable farmer income, while also emphasizing the importance of securing agricultural supplies, supporting agricultural production, and achieving a bumper autumn grain and overall annual harvest. The continued attention to hogs and grain underscores the critical role of hog production capacity management. In July, both hog and piglet prices initially rose but later declined, with monthly losses persisting for self-breeding operations, extending the industry's loss streak to 10 months. The broker believes that while hog prices may gradually improve as the pre-holiday peak season begins in late August, the industry will remain under the shadow of losses, prompting further capacity reduction. Continued monitoring of capacity changes and a focus on the breeding sector are recommended.

Planting Sector: Beware of High Temperatures Affecting Corn Growth, Favor Stress-Resistant Seed Varieties

Recently, frequent high temperatures above 35°C in China's major corn-producing regions can hinder corn growth, particularly during the tasseling and silking stages, leading to heat stress that reduces pollination rates and lowers both yield and quality. Beyond field prevention measures like spraying, irrigation, and targeted fertilization, the broker believes that heat-tolerant, high-yielding corn varieties can play a positive role in mitigating heat stress risks. Interest in such varieties is advised.

Pet Sector: August Asia Pet Expo to Showcase Brand New Products

In August 2026, the Asia Pet Expo is expected to be held in Shanghai. As one of China's largest pet exhibitions, this edition is set to break records with a 320,000-square-meter display area and over 2,600 domestic and international exhibitors, reflecting the vigorous growth of the pet industry. Leading brands are anticipated to unveil new products at the event, warranting attention.

Risk Factors

Risks include volatility in bulk agricultural product prices, livestock disease outbreaks, natural disasters, changes in tariff policies, and fluctuations in exchange rates.