October 25, 2011
China Livestock Market Weekly Review: Panic selling sinks hog prices; broiler market remains soft
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Over the week, panic selling of hogs cast a further pall over the hog market, while AA broiler market showed little improvement due to ample supplies and lacklustre chicken product sales.
Corn prices continued to drop as more new crops were available in the market. Given better-quality yields and surging planting costs this year, farmers were reluctant to sell in expectations of higher prices. With demand from small- and mid-sized traders strong, corn's losses had been limited.
China's soymeal market lacked momentum as CBOT soy futures remained weak despite a slight rise towards the end of the week. With soy port inventories plentiful at six million tonnes and soymeal supplies poised to increase should the government stock four million tonnes of soyoil as rumoured, crushers found little support to lift prices. Over the week, soymeal spot prices were in the range of RMB2,960-3,260/tonne.
Despite a bumper harvest, corn prices are unlikely to fall sharply in the near term on the back of buoyant feed demand, processors' need to replenish shrinking stocks, as well as farmers' tendency to hoard new crops.
In the soymeal sector, market participants will continue to be cautious due to unstable global economic situation. However, soymeal prices are likely move higher should CBOT soy market undergo a technical rebound in the coming week.
Weekly pork sales rose 3.62% to 8,660 tonnes amid falling pork prices. Panic selling of hogs by farmers due to diseases and weaker market outlook sent hog prices lower across regions, with Guangxi and Sichuan seeing the steepest declines.
AA broiler prices dipped further amid ample supplies and poor chicken product sales early in the week. Price declines, however, slowed by week's end as slaughterhouses raised purchase prices to reduce farmers' losses and spur replenishment to ensure future broiler supplies. Meanwhile, day-old chick buying picked up slightly as integrators moved to stock up inventories for New Year holiday demand.
Following several weeks of intensive releases, hog supply may trend on the short side in the coming period. Notwithstanding, immediate market recovery is unlikely as current pork demand is not particularly strong. Similarly, broiler prices are expected to stay soft in the coming week given slack demand for chicken products.
Shandong Liuhe Group plans to build a RMB1-billion eco food industrial park in Tieling city, Changtu county of Liaoning, focusing on integrated broiler operation. Construction will be carried out in three phases, including a 900,000-bird breeder broiler farm, a hatchery, a 50,000-tonne feed mill, a 50-million-bird slaughtering and processing line, as well as organic fertiliser and feather meal production facilities. Upon full completion, the park will be able to output 20 million commercial broilers and 50,000 tonnes of cooked meat products annually. First-phase construction is slated to finish by end of next year.
- Desert Edge Farm Corps is set to establish a 560,000-head hog production base, a 230,000-tonne meat processing plant and a 300,000-tonne feed mill in Xinjiang over the next three to five years. This will set the stage for the largest integrated hog base in the province.
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