September 26, 2003

 

  

China's Livestock Products and Feed Price Trend - August, 2003

      

An eFeedLink Exclusive Report

 

According to the statistics of 450 market surveys, prices of livestock products and corn in China for the month of August have risen amidst market stability. Compared to July, the prices of both livestock products and corn have increased. Compared to the same period last year, livestock product prices have fallen while prices of other products have generally moved up. As the price increases for live hog were greater than that for corn, the hog to grain ratio has risen to 1:5.58, which is an increase of 0.24 percentage points from the month of July, and 0.35 points from the same period last year.

 

1. Hog

 

In August, China's piglets cost RMB8.22/kg, showing an increase of 3% over July's, and a rise of 8.1% compared to the same period last year. There were three provinces with prices lower than RMB6.5/kg, compared to four in July, namely, Jiangsu (RMB6.15/kg), Chongqing (RMB5.69/kg) and Sichuan (RMB6.17/kg). Five provinces recorded prices higher than RMB10/kg, namely Shanxi (RMB11.4/kg), Inner Mongolia (RMB13.67/kg), Gansu (RMB10.62/kg), Qinghai (RMB11.5/kg) and Xinjiang (RMB10.92/kg). The number of provinces with price range of RMB6.5-10/kg has increased from 21 to 22; Chongqing has the lowest prices, while Inner Mongolia has replaced Qinghai as the province with the highest prices.

 

Compared to July, only prices in the five provinces, namely Tianjin, Gansu, Qinghai, Ningxia and Xinjiang have fallen, whereas prices in leading hog producing regions of Hebei, Shandong, Henan, Hunan have increased by more than 5%, and were greater than the national average increase of 3%. Compared to the same period last year, apart from Beijing and Liaoning areas, prices in all of the 21 provinces of north, east, and south China as well as the northeast regions have generally increased.

 

Two-digit growth was reported in 14 provinces, while price increases in Hebei, Shanxi, Zhejiang, Fujian, Jiangxi, Shandong and Guangxi averaged more than 20%, of which  Jiangxi registered a rise of 36%. Compared to the same period last year, prices in the southwest and northwest provinces have generally fallen, with prices in Chongqing and Sichuan dropping by 16.5% and 15.3% respectively.

 

At RMB6.31/kg, live hog prices have grown by 4.6% versus July's, and by 10% compared to the same period last year. Regions with prices below RMB5.8/kg, considered as lowest-price regions, including Chongqing (RMB5.47/kg), Sichuan (RMB5.23/kg) and Yunnan (RMB5.62/kg). On the other hand, regions with prices higher than RMB6.8/kg, considered as high-price regions, comprising seven provinces of Inner Mongolia (RMB7.87/kg), as well as Shanghai (RMB7.08/kg), Fujian (RMB7.28/kg), Guangdong (RMB7.36/kg), Hainan (RMB7.67/kg), Qinghai (RMB9.3/kg) and Xinjiang (RMB6.83/kg).

 

Mid-price regions, ranging from RMB5.8-6.8/kg, totaled 20 provinces. Compared to July, only Beijing and Henan in China registered a marginal decline; other provinces all recorded varying degrees of price hikes. Compared to the same period last year, only Sichuan and Yunnan recorded a price fall by 3.7% and 1.1% respectively. Price increases with above 10% were recorded in 16 provinces, while key-producing provinces such as Heibei (RMB6.13/kg), Shandong (RMB6.23/kg), Henan (RMB5.95/kg) and Hunan (RMB6.48/kg), indicating an increase of 10.4%, 14.1%, 12.7% and 14.4% respectively compared to the same period last year.

 

Compared to July, pork prices have risen by 4.6% to RMB10.61/kg. Again, compared to the same period last year, the increase was 6%. Provinces with prices below RMB10/kg were Beijing (RMB9.83/kg), Heilongjiang (RMB9.55/kg), and Chongqing (RMB9.68/kg), Sichuan (RMB9.82/kg), Yunnan (RMB9.46/kg) and Ningxia (RMB9.28/kg) of the southwest and northwest areas. The numbers of provinces with prices higher than RMB11.0/kg have risen from three in July to ten, for example Shanghai still holds the record of having the highest price (RMB12.25/kg) throughout China. Compared to July, only Tianjin recorded a fall of 2.3%, while compared to the same period last year, a fall was recorded respectively in the southwest and northwest provinces.

 

Live hog product prices have been rising constantly for three months since June. In August, the increase further escalated to a greater extent, when compared to July and to the same period last year. In particular, the prices of piglets, having fallen below RMB8.0/kg for the past 16 months, have increased to RMB8.22/kg, which is the greatest increase for the year when compared to the 8.1% increase last year.

 

As a result, for the first time, the average prices for live hog products between January and August all exceeded the average prices for the same period last year. Specifically,  prices of piglet averaged at RMB7.87/kg, an increase of 0.3% compared to the same period last year, while prices of live hog ranged at RMB5.91/kg, an increase of 2.6% compared to the same period last year. Meanwhile, prices of pork remained at RMB10.13/kg, an increase of 0.4% versus same period last year.

 

Presently, the increase in the live hog to its feed price ratio has driven farmers into a frenzy to produce more piglets, causing piglet prices to move further up, which will definitely disbenefit the live hog production and market in the nearby term. As the procurement costs for piglets account for nearly 20% of the live hog breeding costs, the rise in the prices of piglets implies an increase in the breeding costs and a corresponding decline in breeding productivity. Furthermore, the increase in the number of live hogs on hand will easily lead to an excess of pork products later, causing the prices of live hog products to fall. However, based on the current price trend of live hog products, prices for the year 2003 are generally expected to rise amidst market stability.

 

2. Poultry

 

Eggs cost RMB5.33/kg, an increase of 7.9% versus last month's prices, and a fall of 4.8% compared to August last year. Provinces with prices below RMB4.0/kg have fallen to two from ten in July, including Jilin of the northeast region (RMB3.87/kg) and Heilongjiang (RMB3.91/kg). There were six provinces with prices above RMB6.0/kg, all from the southwest region, namely, Hunan (RMB6.45/kg), Hainan (RMB6.83/kg), Chongqing (RMB6.21/kg), Sichuan (RMB6.42/kg), Guizhou (RMB7.62/kg) and Yunnan (RMB6.64/kg). Compared to July, only prices in Yunnan have dropped by 2.3%. Key poultry egg-producing regions such as Hebei (RMB4.32/kg), Jiangsu (RMB4.75/kg), Shandong (RMB4.46/kg) and Henan (RMB4.45/kg) all increased by 15% above versus the prices of the same period last year. Compared to August last year, only Hainan recorded an increase of 0.4%, while prices in other provinces all fell.

 

Compared to July, prices of live chicken have risen by 2.1% to RMB9.08/kg, which shows an increase of 2.1% versus the same period last year. Foreign packaged chicken cost RMB9.34/kg, an increase of 3.3% compared to July and, and a 0.9% rise compared to August last year. Prices of day-old layer chick stayed at RMB1.9/kg, an increased of 4.4% compared to July, and fell by 13% compared to August last year. Prices of day-old broiler chick ranged at RMB1.88/kg, the same as July, but 8.8% lower compared to August last year.

 

In August, prices of domestic poultry products have fully picked up. Chicken egg prices particularly saw a substantial rebound compared to July; this was an increase for the first time, and by as high as 7.9%. This is mainly attributed to the effect of the price declines since this year, which led to the subsequent decrease in production of layer chickens. However, after the long-term decline in layer chicken production, the demand for chicken eggs has again rebounded. Given the lesser output of chicken eggs, prices were thereby increased to a certain extent.   

 

For the following months this year, prices of domestic poultry products will continue to rise steadily, but it is impossible for the average prices to reach the same price level versus last year's. At present, the average prices of domestic poultry products for January to August have all fallen compared to the same period last year. Prices of chicken eggs, live chickens, and featherless slaughtered-chickens averaged at RMB5.17/kg, RMB8.8/kg and RMB9.07/kg respectively, showing a drop of 7.3%, 5.2%, and 3.1% respectively compared to the same period last year. Layer day-old chicks and broiler day-old chicks for sale stayed at RMB1.93/kg and RMB1.81/kg respectively, registering a fall of 11.3% and 12.7% respectively versus the same period last year. As a result of the rebound in chicken egg prices, chicken to grain ratio for August has risen to 1:4.72, which is an increase of 0.45 percentage points compared to July.                                                                            

 

3. Beef and Mutton

 

Beef prices averaged at RMB15.07/kg, which is an increase of 0.2% compared to July, and 6.4% compared to August last year. There were six provinces with prices below RMB14.0/kg, including Shanxi (RMB13.55/kg), Anhui (RMB13.72/kg), Shandong (RMB13.83/kg), Henan (RMB13.73/kg), Hubei (RMB12.83/kg) and Sichuan (RMB13.56/kg). Prices above RMB19.0/kg were recorded in the three provinces of Shanghai (RMB21.6/kg), Zhejiang (RMB19.72/kg) and Guangdong (RMB19.19/kg). Compared to July, as well as the same period last year, prices in the key producing regions such as Hebei and Shandong areas have all increased, whereas prices in Henan area have fallen. Between January and August, beef prices averaged at RMB15.08/kg, which is an increase of 8.1% compared to the same period last year.

 

Mutton prices kept to RMB15.82/kg, showing an increase of 0.8% compared to July, and 1.6% compared to August last year. There were eight provinces with prices below RMB14.0/kg, namely, the key producing provinces such as Hebei, Anhui and Sichuan, with the lowest in Anhui at RMB12.34/kg. Four provinces, which are key sales regions, with prices above RMB19.0/kg, were Shanghai (RMB19.5/kg), Fujian (RMB22.27/kg), Guangdong (RMB20.0/kg) and Hainan (RMB23.25/kg). Between January and August, mutton prices averaged at RMB15.92/kg, registering an increase of 1.1% versus the same period last year.

 

4. Corn

 

Corn prices in August ranged at RMB1.13/kg, unchanged from July, or an increase of 3% compared to August last year. Prices in the producing regions of Liaoning, Jilin and Heilongjiang were at RMB1.0 /kg, RMB0.98/kg and RMB0.96/kg respectively. Compared to August last year, prices in Liaoning and Heilongjiang were unchanged, while prices in Jilin increased by 1%.

 

Compared to August last year, prices in Jilin and Heilongjiang increased, while prices in Liaoning down by 0.4%, showing a clear indication of the generally stable prices in the producing regions. Compared to July, only prices in Guangdong fell (RMB1.34/kg), while the rest remained unchanged, such as Fujian (RMB1.26/kg) and Hainan (RMB1.42/kg). Compared to August last year, prices in Guangdong and Fujian  increased by 2% and 3.7% respectively, while prices in Hainan remained unchanged.

 

Between January and August, corn prices averaged at RMB1.1/kg, an increase of 1.1% compared to the same period last year. As the live hog price increases were greater than that for corn, hog to grain ratio for August continued to climb to 1:5.58, surpassing the loss-profit balance ratio of 1:5.5.

 

According to the latest figures released by the relevant authorities, corn production this year would be around 116 million tons, higher than the earlier forecast. However, this figure is still relatively lower compared to the same period last year. Nevertheless, the recent auctions of corn and old grain have also stabilized the prices of corn in China.