November 15, 2011
China Livestock Market Weekly Review: Hog prices dip further; slack downstream demand caps broiler price gains
An eFeedLink Exclusive
During the week in review, hog prices continued to fall due to ongoing releases of diseased herds, while AA broiler prices gained further but at a slower pace capped by slack downstream demand for chicken cut-up products.
More farmers were eager to release corn stocks as the humid weather posed increased risk of corn spoilage. Over the week, northeastern producing regions as well as northern and southern ports saw larger price decline due to high arrivals of new-crop corn.
As the EU debt crisis prolonged, negative market sentiments continued to affect global commodities market. Drastic fall in CBOT soy futures prices added pressure on China's soymeal market, which was facing a high port inventory of 6.3 million tonnes. Spot soymeal prices hence slipped to around RMB2,900-3,200/tonne over the week.
In the coming period, corn market will remain weak amid ample supplies and slow demand.
Limited feed consumption, a weak CBOT soy market and ample soy supplies will hold soymeal market weak in China.
Weekly wholesale pork consumption rose 2.17% to 9,127 tonnes. Hog prices continued to fall due to ongoing releases of diseased herds, but the release volume had reduced significantly in some regions.
Despite tepid chicken product sales, slaughterhouses were forced to hike AA broiler prices slightly as supplies remained tight. Day-old chick prices rocketed over the week, as restocking interest for the New Year holiday surged amid rising broiler prices and falling feed costs.
In the short term, pork demand is set to climb steadily amid more frigid weather. With hog releases expected to taper off after weeks of massive selling, downside in hog prices are seen limited.
Meanwhile, supply scarcity should continue to underpin broiler prices in the coming week.
Hunan Yongchang Eco Farming Livestock Company, a RMB20-million subsidiary of Dakang Muye Co Ltd, has recently imported 300 Yorkshire lean breeder hogs from England with a cost of over RMB9 million. The company has a 40,000-sq-m pig shed which can hold up to 2,200 breeder hogs.
Shanxi Daxiang Group has signed an agreement to build a RMB500-million integrated broiler base in Huguan county, Shanxi's Changzhi city. The 200-mu base will include a 240,000-tonne feed mill, a 50-million-bird slaughtering plant, three breeding farms each housing 100,000 sets of parent-stock broilers, a hatchery capable of producing 50 million commercial chicks, as well as 10 standardised broiler demonstration farms. Construction period is set to be two years.
- Anhui Chengda Livestock Investment and Development Co Ltd, a RMB2-billion integrated broiler company set up by Dalian Chengda Food Group, broke ground in Guzhen county, Bangbu city of Anhui. First-phase construction will include a 500,000-bird processing plant, 50 small rearing units spanning 100 mu each and a 500,000-tonne feed mill. Second-phase construction will feature a large-scale chicken product processing line and a 600,000-bird breeder broiler farm. Upon full completion, annual output values and profits are estimated at RMB5 billion and RMB200 million, respectively.
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