December 5, 2011
China Livestock Market Weekly Review: Hog prices stabilise; supply deficit bolsters broiler market
An eFeedLink Exclusive
Over the week, hog prices mostly stabilised except for the southern regions, while a deficit of mature birds sent AA broiler prices higher despite slackened demand for chicken products.
Corn prices resumed slides, with the largest decline seen in Hebei province. Northeastern processors lowered offer prices amid ample new crop supplies, while port prices rebounded slightly on dwindling stocks and a pickup in pre-holiday feed demand.
The world's major central banks acted jointly last Wednesday to provide cheaper dollar funding to European banks facing a credit crunch, briefly lifting global stock and commodities markets. China's soymeal prices were mildly supported as a result, ranging between RMB2,800-3,100/tonne over the week.
The National Bureau of Statistics' latest forecast of China's 2011 corn output at record 191.75 million tonnes, along with the government's delay in large-scale stockpiling programme this year, will likely exert further deflationary pressure on the corn market.
Signs of progress in the tackling of EU debt crisis should put CBOT soy futures and China's soymeal prices on marginal recovery in the coming week. Domestically, the upside potential is seen limited by rising soy imports and slow feed demand growth.
Weekly pork sales retreated 0.95% to 9,528 tonnes over the week, mostly hampered by lacklustre demand in the southern regions, where the traditional winter meat curing season had yet to kick in due to slower temperature changes this year. This led to continued decline in southern hog prices. Meanwhile, the colder northern regions saw hog prices slowly stabilising on rising pork consumption and fewer hog releases.
Supply deficit sent weekly AA broiler prices higher despite slackened demand for chicken products. Over the week, day-old chick prices reversed earlier gains amid slumping demand following the end of the pre-holiday restocking peak.
With the availability of hogs for releases tight and demand for pork poised to grow, hog prices are expected to come out of negative territory in the near term. Meanwhile, AA broiler market is set to stand firm on scarce supplies.
Shandong Yisheng Livestock & Poultry Breeding Co Ltd recently clinched a deal to build a RMB250-million broiler rearing base in Suining county, Xuzhou city of Jiangsu. Set to be completed in 18 months, the 257,800-sq-m base will include nine farms each housing 200,000 parent-stock broilers with a combined annual output capacity of 78 million commercial chicks. Gross profits are estimated at RMB59 million per year once production is in full swing.
Xiong Gui Animal Husbandry Co Ltd recently imported 980 US breeder hogs of Large White, Landrace, Duroc breeds into Guangxi province. The hogs, each costs RMB20,000, will be transported to the company's headquarter in Tiandong county, Bose city.
Sichuan province recently launched its first electronic trading platform for live hog futures. Transaction volume on the first day of trading totalled 3,142 lots valued at RMB5.46 million, while total value of futures contracts concluded on the same day reached RMB600 million.
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