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November 24, 2008
 
China Livestock Market Weekly Review: Lower prices of feed raw materials and livestock ahead

 

An eFeedLink Exclusive

 
 

Market analysis

 

Hog prices stopped stabilized during the early part of the week in review before rising towards the end of the week.


Broiler prices fell in most regions apart from Guangdong where there was a shortage of broilers.


Corn prices were stable in most regions but weaker in southern China and provinces east of Sichuan due to an abundant supply of corn.


Prices of soymeal, cottonseed meal and rapeseed meal fell while fishmeal prices increased due to higher import prices.

 

 

Market forecast: Expect weakness in feed raw materials and livestock prices

 

Feed prices

 

Prices of feed raw materials will weaken further.


New supplies of corn will continue to hit the market in the coming weeks but as demand is likely to remain weak, corn prices will remain low.


Current soy import prices are in the low range of RMB3,000-3,300/tonne. Low soy import prices will cause China's soymeal prices to fall in the near-term.


Prices of cottonseed meal and rapeseed meal will also fall on poor demand.


While fishmeal prices rose during the week in review, they are seen to weaken in the next few weeks due to a lack of demand and an expected slide in import prices.

 

Livestock prices 

 

The improvement in hog prices will be dependent on the situations in Guangdong.


Guangdong sets the trend in hog prices for the rest of the provinces in China.


China's Ministry of Railways had warned that rail transport may rise in the coming weeks as farmers in Guangdong may be forced to return to their hometowns with dwindling industrial jobs caused by many factory closures.


Should farmers leave Guangdong in big numbers, hog consumption and demand in that province will fall drastically. This will cause hog prices to fall in Guangdong and consequently affect the hog prices nationwide.


Expectations of weaker hog prices will also affect piglet replenishment. If we were to look at current piglet and feed prices, it is optimal for backyard farmers to replenish now as compared to the first half of the year due to lower production costs. However actual replenishment will remain weak as farmers are pessimistic with the market outlook.


Broiler prices stabilised during the week but overall replenishment was weak. Broiler consumption will fall with colder weather temperature ahead. Should the retail prices of broiler products remain high, consumption will suffer. This will affect broiler replenishment further.

 
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