Oriental Securities: Sorting out the agricultural sector's outlook for the three main investment opportunities in breeding, planting, and pet food in 2026

The Zhitong Finance App learned that Orient Securities released a research report saying that 2026 is an inflection point year. Farming and planting will gain momentum in sequence, leading to an upward trend in the pig breeding sector. Continued profit and dividend rate increases for high-quality companies are still the core driver driving the long-term performance and valuation improvement of the sector; poultry sector: production capacity is slowing down, prices are expected to remain low, and the pace differences between varieties are concerned; the pet food industry is at a stage where the logic of incremental and price increases continue to be implemented, and overseas markets continue to grow.

Orient Securities's main views are as follows:

Aquaculture chain

1) Pig farming - reverse upward: Under the combined efforts of policies and markets, the certainty of current production capacity removal is extremely high; from a longer-term perspective, the industry's long-term asset removal has continued for four years since 2021, the industry's capacity utilization rate in production lines has reached a high level, and the cycle is gradually bottoming out. Under the simultaneous efforts of policies and markets, the bank can see a simultaneous decline in assets such as weight, piglets, and sows, driving pig prices to rise upward in 2026. 2) Poultry sector - hovering at the bottom. The leading advantage is remarkable: the production capacity of white feather chicken and yellow feather chicken is likely to remain high; however, the bank is also happy to see that the uppermost ancestral generation has begun to decline. In particular, the number of white chicken ancestors introduced and updated in September 25 dropped sharply by nearly 20% compared to the same period in 24 years. The popularity of the poultry sector is also gradually improving. 3) Post-cycle sector - downstream reversal expectations are strengthened, focusing on cycles and growth opportunities: As the downstream farming cycle gradually bottoms out, profits in the feed and animal insurance industry are expected to recover, and the industry will also enter a recovery period that has been lost for a long time.

Planting chain

The bottom is established, and the planting and seed industry is improving. 1) Natural rubber - long-term and short-term resonance upward: From a long-term perspective, the main producing countries are gradually entering a downward cycle of production, and the downward resonance of production capacity and capacity utilization is already a fact. The upward trend in rubber prices has not changed, and marginal costs support the rise in price; in the short term, inventory removal throughout 2025 has laid a solid inventory foundation for the increase in 2026. Under the situation of resonance between inventory and production capacity, rubber is expected to usher in a long-term upward trend in 2026-2027. 2) Corn - the bottom of the price has arrived: in the 2025/26 sales year, international and domestic production increased significantly, suppressing the overall price of corn, while in the context of food security, overall food prices were at the top and bottom; for long-term trends, the bank is awaiting the 2026 new crop area situation and yield estimates. The bank predicts that under the current corn price situation, the global corn planting area is expected to decline in 2026, thereby driving a steady upward trend in future grain prices; 3) Seed industry - waiting for downstream improvement. Variety replacement is the main line: the trend of variety replacement is prominent, and high-yield and high-resistance corn varieties are mainstream. Against the backdrop of corn prices bottoming out, the trend improvement in the seed industry is expected to gradually materialize.

pet food

There has been a fundamental shift in the growth momentum of the industry — from simply relying on an increase in the number of pets to “increasing average pet consumption” as the core driving force. Overseas markets continue to grow, domestic brand recognition continues to increase, and the growth of leading enterprises continues to materialize.

Investment recommendations and investment targets

Investment suggestions: (1) In the pig breeding sector, the continuous profit and dividend rate increase of high-quality companies is still the core driver for improving the long-term performance and valuation of the sector; recent policy and market cooperation have promoted the reduction of production capacity in the pig breeding industry to help the long-term performance of the future sector. Related targets: Muyuan Co., Ltd., New Hope, Wenshi Shares, Shennong Group, Superstar Agriculture and Animal Husbandry, etc. (2) Poultry sector: Production capacity is increasing slowly, and prices are expected to remain low. Pay attention to differences in the pace between varieties. The price of yellow chicken is still impressive in the medium term. Under the influence of remote introduction, the prices of white chicken seedlings and broilers are expected to rise. Related targets: Shengnong Development, Yisheng Co., Ltd., and Lihua Co., Ltd. (3) In the post-cycle sector, the recovery in pig stocks boosts demand for feed and animal protection. If this round of pig production capacity is removed smoothly, industrial chain profits are expected to gradually be transmitted downstream, driving the upward trend in the animal protection sector. Related targets: Haida Group, Ruipu Biotech, etc. (4) The planting chain. The current upward trend in food prices has been established. The planting and seed industries are basically facing well, and investment opportunities for major planting are prominent. Relevant targets: Suken Agricultural Development, Beidahuang, Hainan Rubber, Longping Hi-Tech, Quanyin Hi-Tech, etc. (5) In the pet sector, the pet food industry is in a stage where the logic of incremental and price increases continues to be implemented. Overseas markets continue to grow, domestic brand recognition continues to rise, and leading companies continue to grow. Related targets: Gaibao Pet, China Pet Co., Ltd., Petty Co., Ltd.

Risk Alerts

Livestock and poultry prices fell short of expectations; large-scale outbreaks of livestock and poultry epidemics; prices of raw materials fluctuated greatly.