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November 2, 2011
 
China Feed Market Bi-Weekly Review: Wind-down of aquaculture, low livestock inventories reduce China feed output 

An eFeedLink Exclusive
 
 
Plunging aqua feed demand, coupled with low animal stocks since late September reduced October feed consumption by 3.23%, dragging down production by 2.53%. Compared with October 2010, feed consumption and production were higher by 6.07% and 7.34% respectively.
 
 
Market Analysis
 
China's feed ingredients prices were mostly lower during October. Diminished livestock inventories limited feed demand, while supplies of newly harvested corn and rapeseed depressed the respective markets.
 
Soymeal market, which tracks global soy futures prices closely, lacked upward momentum as the debt crises in Europe terrified investors, who shunned high-risks investment options including commodities. Meanwhile, as sliding hog prices dragged down the prices of other livestock products, feed millers stepped down production to be on the safe side.
 

Table 1:Percentage change of China’s feed production and consumption in June 2010

 

Hog feed

Layer feed

Broiler feed

Aqua feed

Ruminant feed

Others

Total

Feed production, percentage change on-month 

1.88

0.89

2.89

-27.14

-1.03

-0.61

-2.53

Feed production, percentage change on-year

7.02

8.34

11.53

-1.35

6.35

2.92

7.34

 

 

Feed consumption, percentage change on-month

1.31

0.48

1.64

-27.52

-1.85

-1.58

-3.23

Feed consumption, percentage change on-year

5.84

7.09

9.71

-1.94

5.23

1.88

6.07

eFeedLink’s statistics


Hog feed

Hog feed output increased marginally by 1.88% while consumption expanded 1.31%, as high releases in September and slow herd building restricted inventory growths. The feed demand in north China, which experienced abrupt temperature falls, was flat. In the warmer central and southern regions, feed consumption registered 2 percentage points or more increments.
 
Layer feed

Egg supplies increased in October with production rates higher under cooler climates, hence depressing prices by about 10% together with slackened demand after early October holidays. Amid flat layer feed demand and weak stockpiling interest, feed output increased less than 1%, despite a substantial increment of 8.34% year-on-year.
 
Broiler feed

Several broiler farmers incurred losses in October, with broiler prices falling and rearing costs on the rise. Inevitably, feed consumption increased slowly, at a rate of 1.64%, due to slack chick procurement interest. Production volume was higher by 2.89%.
Nonetheless, year-on-year, broiler feed consumption increased considerably by 9.71% while production expanded by almost 12%, thanks to the stable inventory growth since February this year.
 
Aquaculture feed

As expected, aqua farming wound up swiftly in China, especially in the north, with the weather temperatures falling. Consumption of aqua feed plunged 27.52%, sinking production volume by 27.14%. Compared with October 2010, both production and consumption volumes were lower this year due to the early arrival of cold climates.
 
Ruminant feed

Substantial falls in beef cattle inventories, the result of hastened releases amid soaring cattle prices, in conjunction with decreased feed intake amid colder weather, weakened ruminant feed demand by 1.85%. Hence, October's ruminant feed output inched down 1.03%.
 
 
Market forecast
 
China's aqua feed demand will continue to shrink in November while hog, cattle and poultry feed consumption stays limited due to sluggish inventory growths and diminished feed intakes. Overall feed demand is therefore expected to slacken, limiting output volume for the month. Additionally, the threat of power shortages looms large, hence imposing a challenge to the feed manufacturing industry to upkeep production levels.
 


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