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Market Reports

May 8, 2012
 
China Feed Market Bi-Weekly Review: Poultry sector drives China feed demand expansion; producers in cautious mood
 
An eFeedLink Exclusive
 
 
Overall feed consumption increased 13.32% compared with March, contributed mainly by the steady expansion of the poultry sector.
 
 
Market Analysis
 
The stable rise in feed consumption revved up production by 11.31% in April. Nonetheless, compared with April 2011, both feed consumption and production were only higher by about 4% respectively. The main reason for the slower-than-expected growth of the feed industry was sluggish hog inventory expansion and the delayed aquaculture recovery.
 
Prices of corn were firm in early April amid steady feed output, but crept down after middle of the month. The storms in south coastal regions, which dampened stockpiling interest of buyers, together with an increase in the usage of wheat in feed formulation had decimated the demand for corn.
 
After surpassing 2011’s record in the first week of April, soymeal prices slid for two weeks before breaking the record set earlier this month, with the support of a buoyant CBOT soy market. Meanwhile, fishmeal prices climbed steadily over the month amid tightening supplies. Overall, the costs of protein ingredients in feed production increased during April although rapeseed meal prices softened with aquaculture recovery in some regions threatened by adverse climates.
 
As for feed supplements, prices stayed soft over the month, hence helping to limit the rise in input costs of feed processors.
 

Table 1:Percentage change of China's feed production and consumption in Apr 2012

 

Hog feed

Layer feed

Broiler feed

Aqua feed

Ruminant feed

Others

Total

Feed production, percentage change on-month 

3.22

9.21

9.07

139.15

6.84

4.26

11.31

Feed production, percentage change on-year

2.44

4.57

8.76

-1.12

10.76

9.09

4.73

 

 

Feed consumption, percentage change on-month

4.95

11.3

11.47

136.68

10.83

6.79

13.32

Feed consumption, percentage change on-year

1.58

4.11

8.56

-2.89

10.87

8.91

4.11

eFeedLink's statistics

 
Hog feed
 
Hog feed demand continued to grow as a moderate rate of 4.95%, as low piglet supplies limited inventory growth. Moreover, sliding prices of hog dampened farmers’ confidence to build inventories over the month. Compared with last April, hog feed consumption and production were only marginally higher.
 
Layer feed
 
High layer inventories supported feed demand to grow steadily by 11.30%, pushing up production by 9.21% - better-than-expected performance considering the meagre profits layer farmers were making. The improved profitability during April was the main factor driving the growth.
 
Year-on-year, feed consumption increased 4.11% while production rose 4.57%.
 
Broiler feed
 
Topping again in performance, the broiler sector enjoyed a rise of 11.47% in consumption, which was 8.56% high year-on-year. Production volume grew at a slower rate of 9.07%, reflecting the cautious mood of feed manufacturers. This was a healthy 8.76% higher compared with April 2011.
 
Aquaculture feed
 
To make up for the late set off this year, aqua farmers raised nursery inventories eagerly in early April, and stocked feed inventories in preparation for the production hike. Hence, demand and output for aqua feed jumped more than 130% each over the month. Had the weather in the south coastal provinces been more pleasant, aqua feed sales and production could have exceeded last April’s volumes.   
                                                                                                    
Ruminant feed
 
The marked improvement in weather in the north helped to expand the demand for dairy cattle feed, driving ruminant feed consumption up by 10.83%. However, amid high output costs and uncertain outlook of the beef cattle market, feed producers limited production, hence resulting in a slower production growth of 6.84%.
 
 
Market forecast
 
The poultry sector should continue to be the main contributors of feed demand growth. Although the hog disease situation has improved, it will take some time for sows to recuperate, before piglet production increases. Hence, hog feed demand is unlikely to be the driving force behind feed demand at least for Q2. As for aquaculture, it remains uncertain how severe the disruption will be in regions affected by the stormy weather.
 
Overall, feed demand will continue to increase in May. Production volume will expand at a slower rate, as feed producers stay cautious amid high macro ingredients costs.
 


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