According to the Zhitong Finance APP, China Merchants Securities released a research report stating that starting from mid-July, the reduction in chicken supply has led to a gradual rebound in chicken prices, improving profitability for breeders and increasing their willingness to restock. On the other hand, the restocking of chicks in late July corresponds to the market supply in September, which has also boosted breeders' enthusiasm for restocking, resulting in an overall positive demand for chicks. However, due to the increased elimination of breeding chickens earlier, the output of chicks has decreased, and chick prices have rebounded from the bottom since mid-July. The large-scale losses in yellow feather chickens may accelerate capacity reduction; leading yellow chicken enterprises have seen their breeding costs drop to low levels, and after the peak season, chicken prices are expected to significantly release profit elasticity.
<h2>The main viewpoints of China Merchants Securities are as follows:</h2>
White Feather Chickens: Chicken prices rebound from the bottom, and restocking by breeders increases
In July, the average price of chicks in major production areas was 1.41 yuan per chick, down 43% year-on-year and down 38% month-on-month; the average price of live chickens was 6.52 yuan per kilogram, down 12% year-on-year and down 9.2% month-on-month; the average price of chicken products was 8,443 yuan per ton, down 8.8% year-on-year and down 2.8% month-on-month; the average loss per chick in the live chicken breeding sector was slightly 2.59 yuan. Starting from mid-July, the reduction in chicken supply has driven a gradual rebound in chicken prices, improving profitability for breeders and increasing their willingness to restock; on the other hand, the restocking of chicks in late July corresponds to the market supply in September, which has also boosted breeders' enthusiasm for restocking, resulting in an overall positive demand for chicks. However, due to the increased elimination of breeding chickens earlier, the output of chicks has decreased, and chick prices have rebounded from the bottom since mid-July.
China Merchants Securities believes that based on the previous decline in chick supply, it will transmit to the live chicken sector, and it is judged that there will also be support for chicken prices in August. Since the beginning of the year, the overseas breeding volume has significantly decreased year-on-year, and it is expected that the supply of parent stock meat chicks in China will be tight in the second half of 2025, which will also affect the supply of commercial meat chicks in 2026. The outlook for the breeding sector is optimistic.
Yellow Feather Chickens: Chicken prices warm up in late July, optimistic about peak season prosperity
In July, the average price of fast-growing chickens was 3.94 yuan per pound, down 19.6% year-on-year and up 3.2% month-on-month; the average price of Xueshan grass chickens was 6.43 yuan per pound, down 27% year-on-year and up 5%. Since the beginning of this year, the combined output of the top two enterprises has increased year-on-year, and the supply of yellow feather chickens is relatively sufficient. The demand for yellow feather chickens has significantly improved during the summer, and chicken prices have rapidly rebounded since late July, with optimism about chicken prices in August. Currently, chicken prices correspond to losses in the breeding sector, and it is expected that the industry's lagging capacity may accelerate its exit. The output cost of yellow feather meat chickens has dropped to low levels, with WENS's yellow feather chicken output cost already down to around 5.6 yuan per pound, and LIHUA's yellow feather chicken output cost may have fallen below 5.5 yuan per pound in recent months; after the peak season, chicken prices are expected to significantly release profit elasticity.
Optimistic about the prosperity of white chicken breeding, and expect a rebound in yellow chicken prices during the peak season
White Feather Chickens: Although the import of grandparent breeding chickens is expected to increase year-on-year in 2024, it has not returned to the normal import levels before the interruption of breeding imports; it is expected that the demand for high-quality parent stock chicks will be good in 2025; coupled with the significant decrease in overseas breeding imports, the supply of parent stock chicks will be tighter in the second half of 2025, which will also affect the supply of commercial chicks in 2026. It is highly recommended to focus on integrated leading enterprises that explore the value of the entire industry chain, such as Sunner (002299.SZ).
Yellow Feather Chickens: Currently, the inventory of parent stock breeding chickens has dropped to historically low levels, and coupled with the industry's continued losses for some time, supply may contract, laying the foundation for future increases in chicken prices
Currently, the breeding cost of yellow chickens has fallen to a low level, and after the chicken prices warm up, there is hope for a significant release of profit elasticity. In the long term, with changes in consumption habits, the implementation of sales bans, and economic recovery boosting consumption, the market for chilled yellow feather chickens may still have considerable development space. Key recommendations include LIHUA (300761.SZ) and DeKang Agriculture and Animal Husbandry (02419).
Risk Warning
Fluctuations in chicken prices exceed expectations; the sales and cost performance of listed companies fall short of expectations; sudden large-scale uncontrollable epidemics; fluctuations in feed raw material prices exceed expectations; major food safety incidents

300498

002299

300761

China Merchants Securities released a research report indicating that since mid-July, the price of broiler chickens has gradually rebounded, improving profitability for farmers and increasing their willingness to restock. The overall demand for chicks is positive, and chick prices have rebounded since hitting a low in mid-July. It is expected that chicken prices will be supported in August, and with improved demand during the peak season, the price of yellow-feathered chickens also shows a warming trend. Overall, the exit of outdated capacity in the industry may accelerate

CITIC Securities: Chicken prices have bottomed out and are rebounding, optimistic about August's prosperity