Tisco Securities upgraded Thailand's food sector to overweight from neutral on Wednesday, saying it anticipates a strong earnings rebound in the second half of 2026 after the industry reached the trough earlier in the year.
The brokerage expects the livestock segment to stage a recovery in H2 2026, with both top-line growth and profit-margin improvement. According to Tisco, chicken and swine prices moved off their lows after hitting bottom in the second quarter of 2026, a turn driven by tightening supply conditions that are forecast to take roughly one to 1.5 years to return to normal.
Export demand is cited as a supporting factor for the sector. Chicken export orders remain firm, and Tisco noted additional support from ongoing European Union restrictions on Brazilian chicken imports. Feed costs, which weighed on margins earlier in the cycle, have begun to ease as corn prices decline.
Markets outside Thailand also show signs of improvement. Tisco highlighted recovering swine prices in China and Vietnam following supply-control measures in those markets, a development the brokerage views as contributing to a healthier external pricing environment for Thai exporters.
The second quarter of 2026 represented the low point of the cycle, with the sector's consolidated net profit contracting 58% year-on-year to 6.9 billion baht, even as revenue fell only 2% to 200 billion baht. The sharp drop in earnings was driven chiefly by a 31% year-on-year decline in swine prices, weaker chicken pricing and elevated feed costs. Corn prices had increased 8% year-on-year at that time.
Tisco observed that weak swine prices in China and Vietnam during the first half of 2026 further pressured industry earnings. Livestock prices began to recover in July and August, and corn costs have started to moderate, providing a more constructive backdrop for margins going into the latter half of the year.
In terms of stock selection, Tisco Securities' top picks within the upgraded sector are TFG, CPF and BTG.
Context for markets and logistics
From a supply-chain perspective, the interplay between livestock supply tightening, feed-cost trends and export flows will be critical to the sector's earnings recovery. Freight and distribution networks that handle poultry and pork exports, as well as feed grain logistics, are likely to see demand patterns shift as production and trade volumes respond to the evolving price environment.