March 3, 2020
Covid-19 update: Operations improve substantially, but weak consumption challenges livestock sector (Mar 11, 2020)
Market participants reported that the logistics in the livestock and feed sectors have mostly recovered and deliveries of feed and livestock products were smooth. With prices rebounding strongly over the past couple of weeks, broiler companies and farms were enthusiastically building stocks in anticipation of supply shortages in the coming period. Even native broiler companies, which had to transport chickens to other provinces such as Shandong for slaughtering as live markets were closed, keenly purchased chicks. Several market participants anticipated that live poultry markets in the eastern regions should be opened by April.
Chick supplies were limited, nonetheless, as hatcheries culled numerous chicks between mid- January and mid-February, when prices crumbled with demand amid the logistics freeze, and breeder hens were force-moulted to save on feed consumption. Chick prices soared on the back of supply shortages and robust demands.
The human traffic in cities and even municipalities such as Shanghai increased prominently over the week. Although it was still a far cry from normal days many more commuters were travelling compared with a week ago. For instance, Shanghai Metro trains were fully seated during evening peak hours, a scene unseen since the outbreak of the contagious Wuhan coronavirus. On the whole, commuter volume was about 15% of normal times. The absence of students, foreign workers and old folks was the main cause for the drop in ridership, while the switch to taking private transports for fear of the Wuhan virus infection made its fair share of contribution.
Meanwhile, salon car and motor cycle traffics in Shanghai have recovered 90% and 80% respectively, according to the locals. Road traffic has slowed considerably during peak hours as the working class returned to work. About 90% of retail shops have resumed business and queues formed at some store fronts as early as 8a.m.
However, meat consumption in China remained far from encouraging. First, the operation rates of school and workplace canteens stayed low due to the absence of students and foreign workers. Secondly, the business of restaurants remained poor as consumers stayed away from public places to avoid infections. In particular, the plunge in the fast food business has slashed the sales of AA broiler severely. Thirdly, the devastation of tourism has greatly curtailed the meat demand. Amid slow demand, the cold storage facilities of broiler slaughterhouses remained bloated.
Looking forward, the recovery of China's livestock and feed industry will mainly depend on how fast the food and beverage sector bounces back from the current pit, and even more importantly how robust the country's economy could withstand the blow of Wuhan coronavirus pandemic.
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