October 18, 2011
China Livestock Market Weekly Review: Disease outbreaks hit hog market; broiler prices push lower
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Over the week, hog prices tumbled following an influx of diseased hogs onto the market, while AA broiler prices pushed lower amid stalling demand and falling prices of chicken cut-up products.
China's corn prices mostly declined as more newly-harvested corn came onto the market, prompting northern traders and processors to slash bid prices. Higher corn arrivals also put pressure on port prices.
After an initial weak position earlier in the week, China's soymeal market strengthened as CBOT soy futures prices rebounded on Europe debt hopes and tight US soy fundamentals. However, most feed millers remained prudent amid flat hog inventories and dwindling aquaculture production.
In the coming week, corn prices are expected to pick up as deep processors and feed millers step in to make purchases to refill depleting corn stocks.
Soymeal prices are likely to be higher should CBOT soy futures soar further. However, unstable global economic situation, abundant soy supplies in China and cautious buying mood should cap the upside momentum.
Weekly demand for pork inched up 0.58% to reach 8,377 tonnes after the holiday. China was recently hit by a wave of hog disease outbreaks, with bocavirus-induced diarrhea decimating hordes of piglets in the south, while northern regions were plagued by the recurrence of food-and-mouth diseases and swine fever. Hog prices tumbled over the week following an influx of diseased hogs onto the market.
AA broiler prices rose briefly on short post-holiday supplies, before pushing lower by mid-week due to falling prices of chicken cut-up products and stalling broiler demand as most slaughterhouses were drawing on existing inventories. Over the week, day-old chick prices extended decline as farmers were not motivated to replenish amid deteriorating price prospects for broilers.
In the week ahead, mass releases of hogs in several disease-hit regions are expected to drag hog prices down even as pork consumption is set to gradually improve. Similarly, near-term broiler market is seen on weak trends.
Qingdao Jiulian Group has signed an agreement to set up a RMB2-billion integrated broiler base in Guangxi's Qinzhou city, which will incorporate feed production, breeder and commercial broiler rearing, slaughtering and cold storage, food processing, as well as import and export trading and distribution. Construction will start next year and finish by end of 2016.
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