The agriculture sector surges against the trend! Jin Jian Rice Industry and Beidahuang both hit the daily limit, as expectations of tightening global agricultural product supply heat up.

Ask AI: How does the situation in the Middle East affect the global fertilizer supply and drive up prices of agricultural products?

In the morning, the agriculture sector rose sharply against the trend. Jinjian Dairy Industry and Beidahuang rose to the daily limit. Beijing Ji Zhi Nong, Suqian Nongfa, Qiule Seed Industry, and Jingliang Holdings, among others, also followed suit.

The key logic driving current market speculation in the agriculture sector is that expectations for a contraction in global agricultural product supply are heating up. Fertilizer shortages may push up planting costs, while potentially also leading to a decline in crop output, which would further tighten grain supply. In addition, China’s agriculture sector is in the late stage of capacity elimination. Most institutions generally expect the sector to see a cyclical turnaround over the next two years, and capital is positioning early by building positions in related stocks.

Goldman Sachs said that for the agricultural market, the bigger risk may come from a decline in crop output, rather than only from rising input costs. Fertilizer shortages caused by the situation in the Middle East could reduce output due to delayed fertilization or improper application, and some farmers may shift to crops with lower fertilizer intensity, further tightening agricultural supply. Multiple international institutions have published research reports indicating that global grain inventories continue to fall. Uncertainty regarding grain supply from some major producing countries is increasing, and the center of gravity for agricultural product prices is expected to rise steadily. This highlights the value of allocating to China’s agriculture sector.

Related industries:

Seed industry: As the source of the agricultural industry chain, high-quality varieties are a core factor for improving grain yields. As regions increase investment in seed R&D and encourage the adoption of biological breeding technologies, high-quality varieties with independent intellectual property will accelerate market-based implementation. Seed companies with rich variety reserves will directly benefit from industry growth dividends.

Fertilizer: Fertilizer is an important agricultural input for grain production. Currently, there is uncertainty in global fertilizer supply. Domestic fertilizer companies, leveraging stable production capacity and cost advantages, will have opportunities for both volume and price growth. Head companies with raw material self-sufficiency will see their earnings flexibility further released.

Grain planting: Ongoing progress in high-standard farmland construction will improve planting efficiency. Combined with the rollout of subsidies for grain growers, farmers’ enthusiasm for planting grain will be fully mobilized. Large-scale farming enterprises can effectively spread planting costs through advantages in scaled operations, and their profitability will rise steadily.

Agricultural machinery: Accelerating agricultural modernization will drive growth in demand for agricultural machinery equipment. In particular, market demand for smart agricultural machinery and large agricultural machinery will continue to climb. Companies with strong capabilities in R&D and manufacturing of high-end agricultural machinery will gain broad market space and fully benefit from the wave of agricultural mechanization.

Industry chain companies:

Beidahuang: China’s largest listed modern farming company. It has more than ten million mu of high-quality arable land resources and mainly grows grain crops such as rice, corn, and soybeans. Benefiting from rising grain prices and advantages in large-scale planting, it has strong earnings stability. It is a benchmark enterprise in China’s grain planting sector.

Longping Hi-Tech: A leading seed industry company in China. It has rich variety reserves in hybrid rice, corn, and other fields, and its biological breeding technology is at a leading level in the industry. The market share of multiple core varieties ranks among the top. Relying on its R&D strength, it continues to launch high-quality new varieties, with sufficient growth momentum.

Sinochem Fertilizer: A leading company in China producing controlled- and slow-release fertilizers. It has a complete matrix of fertilizer products. Relying on its technological advantages to build green and efficient fertilizer products, it can provide integrated planting solutions for farmers. Benefiting from improving industry conditions in the fertilizer sector, it shows significant earnings flexibility.

Suqian Nongfa: An agricultural reclamation enterprise with rice and wheat planting, and seed production, as its core businesses. It has high-standard planting bases. Leveraging integrated advantages across the industrial chain, it has implemented a full-chain layout covering planting, processing, and sales. It can effectively withstand the impact of industry fluctuations, and it has strong certainty regarding earnings growth.