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November 17, 2008
 
China Livestock Market Weekly Review: Pessimistic outlook for feed and livestock markets

 

An eFeedLink Exclusive

 
 

Market analysis

 

The recent tainted egg scandal had diminishing effects on China's livestock market.


However, lower hog prices in Guangdong - a province that sets the benchmark for hog prices natiowide - led to weaker cross-province hog trade activities during the week in review. This dragged hog prices lower.


Poor demand for broiler products resulted in lower broiler prices in most regions except for Guangdong where broiler supplies were tight.


Corn prices were stable to lower in most regions, while soymeal prices fell amid lower CBOT soy prices.


Prices of rapeseed meal and fishmeal stablised while prices of cottonseed meal rebound due to tight supplies.

 
 

Market forecast: Prices of feed raw materials and livestock to stay weak

 

Feed prices

 

Prices of feed raw materials will continue to fall.


Lower animal replenishment in recent weeks will lead to weaker corn demand, hence pointing to lower corn prices in the near-term.


Soymeal prices will fall further should CBOT soy prices continue the downward trend in the coming week.


Prices of cottonseed meal increased during the week in review. However, as the cost of cottonseeds is expected to ease soon, it will have an influence on prices of cottonseed meal.


Aqua feed demand will fall as aquaculture rearing enters its traditional lull period. This will drag prices of rapeseed meal and fishmeal further downward. 

 

Livestock prices 

 

Hog prices are expected to fall as hog supplies will exceed demand.


Lower hog prices will cause backyard farmers to hold back on replenishment. This will consequently affect the business of commercial sow rearing farms. In order to secure sufficient profits, these farms will eliminate their sows prematurely and also stop replenishing backup sows.


However, large-scale hog farms will continue to purchase backup sows and also eliminate sows only when they reach the mature stage. This will provide a glimmer of hope to the uncertain outlook of China's hog industry.


Poor demand of broiler products led slaughterhouses to cut back on broiler purchases during the week in review and caused broiler prices to fall.


However, despite lower broiler prices at the wholesale markets, prices of certain broiler products like mid-joint wings are still high at the retail markets. High retail prices of broiler products will affect consumption and further reduce the demand for broiler products.


Weak broiler demand and high feed prices will affect broiler rearing profits in the near-term and cause broiler replenishment volume to fall.


Overall, situations in China's livestock markets will be bleak in the coming weeks.

     
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