December 8, 2008
China Livestock Market Weekly Review: Animal replenishment seen lower amid weakening general consumption
An eFeedLink Exclusive
Hog prices continued to rise during the week. Broiler prices rebound in northern China but continued to fall in southern China.
Corn prices fell as affected by lower global corn prices while soymeal prices fell on lower crushing costs. Prices of cottonseed meal and rapeseed meal slid on weaker demand. Fishmeal prices rose during the early part of the week before stabilising towards the end of the week.
Market forecast: Hog and broiler replenishment will fall further
Prices of raw materials for feed seen to weaken further.
Weak animal replenishment and poor sales of processed animal products will result in a fall in corn demand for feed and cause corn prices to fall.
Local soymeal prices will fall consequent of lower cost of imports.
Prices of rapeseed meal and cottonseed meal will continue to fall amid lower demand. Lower soymeal prices will also prompt feed millers to replace rapeseed meal and cottonseed meal with soymeal whenever permissible.
More gains are seen in fishmeal prices.
Hog prices in some provinces rose during the week as increase numbers of workers who lost their job in the cities returned to their home villages. Increased demand for waxed meat products in southern China also bolstered hog prices. At the same time, the average weight of released hogs during the week in review was much lighter as compared to previous weeks. This indicates that hog supplies will unlikely increase significantly in the coming weeks. Tighter hog supplies will thus prop up hog prices in the near-term.
Despite a relatively favourable outlook for hog prices in the near-term, backyard hog farmers remain reluctant in replenishment. Some commercial sow farms are expected to stop replenishing altogether. Only large-scale farms will continue with piglet replenishment.
Meanwhile, the rate of sow elimination fell during the past week after farmers eliminated sows actively previously. As large-scale farms and commercial sow farms are not willing to stock up on sows, supplies of sow will likely be tight in 2009.
A price correction was seen in broiler prices in northern China, which recovered after continuous falls in the past weeks. Sales of broiler products did not improve.
Despite the improved broiler prices in northern China, broiler farmers were not eager to increase replenishment as broiler chick prices, especially those of AA broiler chicks, were high during the past week. Additionally, if farmers replenish now, they would have to release their broilers for sale after the Spring Festival in end-January, which is expected to see lower meat consumption.
Broiler replenishment is expected to be weak in the near-term.
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