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November 2, 2008
 
China Feed Market Bi-Weekly Review: Feed demand fell in October

An eFeedLink Exclusive
 

China's feed production and consumption fell in October.
 
 
Market Analysis
 
Aquaculture rearing activities declined in October with the onset of cooler weather conditions.
 
At the same time, inventories of hogs, layers and broilers also fell as farmers were reluctant to replenish in big volumes amid lower livestock prices.
 
This led to reduced feed consumption, and consequently caused feed millers to scale down their production during the month. 
 
China produced 8.64 million tonnes of feed in October, down 7.55 percent and 11.32 percent on-month and on-year respectively.
 
Prices of major raw materials for feed like soymeal, cottonseed meal, rapeseed meal and corn fell in October. Increased supplies of new corn crops in most regions led to lower corn prices and also affected the prices of other feed ingredients. 
 
Lower prices of raw materials allowed feed millers to adjust downward the prices of compound feed by RMB150-200/tonne, while prices of feed concentrates fell by about RMB500/tonne.
 
Prices of premixes remained firm on stable prices of feed supplements.
 
Despite lower prices of compound feed and feed concentrates, weaker prices of raw materials for feed prompted farmers to switch to self formulating feed for their animals.
 
Increased usage of self-formulated feed and lower animal inventories led to lower production and consumption of compound feed.
 

Percentage change of China's feed production and consumption in October 2008

 

Hog feed

Layer feed

Broiler feed

Aqua feed

Ruminant feed

Others

Total

Feed production, percentage change on-month 

-5.80%

10.60%

-8.08%

-29.28%

-0.25%

-3.06%

-7.55%

Feed production, percentage change on-year

10.87%

-15.96%

-37.50%

1.32%

-15.93%

-11.76%

-11.32%

 

 

 

 

 

 

 

 

Feed consumption, percentage change on-month

-5.79%

10.69%

-8.13%

-29.41%

-0.28%

-3.11%

-7.57%

Feed consumption, percentage change on-year

17.57%

-10.91%

-33.92%

7.19%

-11.02%

-6.64%

-6.06%

eFeedLink's statistics
  
Hog feed

Hog prices fell in October by an average of 4.72 percent in the major hog production provinces. In Hunan, hog prices fell by about 13 percent while hog prices fell by more than 7 percent in Sichuan. Hog prices were lower in southern China as compared to northern China as farmers in southern China had limited hog releases prior to the National Day holidays in early October anticipation of higher prices. This resulted in abundant supplies of hogs after the National Day holidays, therefore causing prices to fall.
 
Lower hog rearing profits caused hog farmers to cut back on replenishment and increased releases. Hog inventories decreased and hog feed demand and consumption thus fell.
 
Layer feed

In late October, the detection of melamine in eggs produced by Dalian Hanwei Enterprise Group impacted consumers' confidence in China's egg products. Layer farmers were pessimistic with the market outlook and started to eliminate more layers. However layer feed demand still increased on-month as October was the peak egg-laying season.
 
Overall, layer feed demand registered the highest growth in east China. Layer feed demand grew by more than 13 percent on-month in that region. In northeast and northwest China, layer feed demand fell as layer feed intake was affected by lower weather temperature.
 
Broiler feed

Broiler prices fell by 9.28 percent throughout the month, with prices slightly higher in southern China as compared to northern China.
 
Broiler feed demand fell slightly in northern China but fell by a bigger margin in northeast China amid lower weather temperature. The demand for broiler feed fell by more than 10 percent on-month in southern China, southwest China and northwest China. In eastern China, broiler feed demand fell by 7.12 percent on-month.
 
Aqua feed

Aqua feed demand fell by a big margin in October. In northern China, aquaculture rearing activities declined amid lower weather temperature. It is expected that aquaculture rearing activities in these regions will come to a standstill in November.
 
Aqua feed demand was higher in southern China due to better weather conditions. Aqua feed demand totalled 700,000 tonnes in Guangdong, Guangxi and Hainan.
 
Ruminant feed

In early October, dairy cow rearing activities were affected by China's tainted milk scandal, therefore causing ruminant feed demand to fall. However, the ruminant market soon resumed trade activities with speedy actions taken by the relevant authorities. Ruminant feed demand thus picked up. Overall, ruminant feed demand only fell marginally as compared to September.
 
 
Market forecast

Animal feed production and consumption will unlikely improve in November as livestock prices are seen stable to lower. In December and January however, livestock rearing and animal feed markets are seen to pick up slightly as farmers are expected to replenish more actively in anticipation of higher meat and seafood demand during the Lunar New Year period in end January.
 
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