Phillip Securities Thailand forecasts a mixed outlook for the food sector, highlighting ongoing volatility in swine prices and a likely earnings contraction in FY26 despite recent improvements.
FY25 Review: Volatility amid Raw Material Relief
The food sector experienced significant earnings volatility in 2025. Strong performance, particularly in the second quarter, was underpinned by high swine prices due to tight supply and reduced feed costs for corn and soybean meal. However, earnings dropped sharply in the third quarter as swine prices hit a two-year low, driven by seasonal flooding, declining domestic demand, and labor shortages in slaughterhouses. Despite the quarter-on-quarter dip, lower raw material costs ensured a year-on-year profit increase.
Improved Outlook for 4Q25
Analysts expect conditions to improve in the final quarter of FY25, citing a rebound in swine prices, which recently rose to Bt67/kg after bottoming at Bt56/kg in October. Chicken prices have remained stable, and animal-feed costs are low, positioning the sector for continued year-on-year growth through to the end of the year.
FY26 Outlook
Looking ahead, Phillip Securities anticipates swine prices will continue to rise into the first half of 2026. This is supported by supply-limiting policies from the Swine Raisers Association, easing labor shortages, and government stimulus measures. In addition, Vietnam’s swine industry is stabilizing amid improved disease control, and China’s government is acting to curb pork oversupply.
However, the report cautions that despite positive revenue and volume trends, the sector’s earnings might weaken year-on-year due to normalized margins after a high-base year. Sector-wide earnings are projected to contract by 17.8% on average in FY26.
Raw Material Trends and Export Prospects
Corn and soybean meal prices are expected to remain low due to global overproduction and a newly approved Thai import quota for cheaper US corn. This should help maintain profit margins for industry operators. Chicken prices are expected to stay steady, with domestic sales growing at a low-single-digit rate and exports seeing mid-single-digit growth, particularly to the Middle East.
Sector Rating and Top Picks
Phillip Securities maintains a ‘NEUTRAL’ outlook for the sector, naming TFG as its top pick, citing its domestic sales focus and retail expansion strategy. Additional ‘BUY’ ratings were given to CPF (THB 25.75), BTG (THB 20.40), TFG (THB 6.40), and GFPT (THB 13.90).
