September 18, 2003

 

 

Strong Growth of Feed Output in China Seen for 3rd Quarter 2003

    

In the third quarter of 2003, a substantial increase is seen in the production and sales of animal feed in China. Significant growth is seen in poultry feed production, especially in broiler meat feed. Likewise, the increment in pig feed production would continue at a relatively high level, whereas the output of aquatic-product feed and ruminant feed is seen to decrease. The growth in China's feed production for the third quarter is expected to be above 10%, while the fourth quarter foresees a drop in output versus the third quarter's, although production volume would still be at a relatively high level.     

 

According to market analysis, China's feed production in August rose by more than 10% over July's production. The production and sales of feed for the month of September are expected to maintain at a relatively high level.

 

There are some differences between production and sales scenarios for the month of July and August:

 

Northern China regions showed a slower increase in growth rate for July due to the outbreak of SARS, which has first inflicted south China and spreading to the north. As the country recovered from the outbreak of SARS, feed market in mid-August saw favorable performance. This is mainly attributable to the rapid growth in feed production in northern areas, as well as the robust demand in the southern regions;

 

Feed production for the third quarter is expected to rise more than 10%. As for the fourth quarter, a marginal decline in growth over the third quarter's is anticipated; however, the growth rate is seen maintained at above 5%, a considerably high growth rate too.                                                                                                        

 

The rapid growth in China's feed production and sales in August is mainly attributable to the country's increasing demand for feed and recovery of meat exports and poultry prices. The supply and prices of feed raw materials will greatly affect feed production in September.

 

In August, there was amply supply of energy producing ingredients such as corn and other stockpiled grains, thus the prices of corn remained basically stable with marginal falls. Protein supplying materials were relatively tight; therefore its prices were correspondently high. Meanwhile, prices of soymeal started to rise in August, the trigger point for the price hikes for latter part of this year.  Corn prices for the month of September are seen to rise slightly; nevertheless, a large volume of new crop will enter the market soon, as well as the auction of large amounts of old crops and stockpiled materials are likely to hinder further price hikes. Accordingly, corn supply for the third quarter will be abundant.

 

It should be noted that the tightening supplies of soymeal and protein materials in September are expected to keep soymeal prices at a high level.  The supply volume and prices of soymeal would have a direct bearing on feed production in the third quarter.