October 20, 2011

China Feed Market Bi-Weekly Review: Post-National Day holiday livestock market softens; feed costs down 
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Early October saw China's meat processors and slaughterhouses scaling back on livestock procurement while consumer sales and feed costs slowed, pushing down prices of pork, poultry meat, eggs and aqua products.
Market Analysis
Hog prices were on a downswing in the first half of October, weighed by farmers' pre-holiday selling rush and pork reserve sales by local governments to ensure festive supplies. The price decline coincided with recent weakness in corn and soymeal market, which brought down feed production costs. With supply fundamental remaining tight, hog prices are set to gradually stabilise later in the month.
China's layer sector entered peak production season in October. Total egg supplies rose over the month, driving egg prices lower alongside cheaper feed costs and weaker hog prices.
Broiler inventories took a plunge following mass releases earlier to meet festive demand. Broiler prices continued to decline after the holiday as consumption dropped while slaughterhouses put off purchases due to ample stocks. This hampered farmers' replenishment interest, pressuring day-old chick prices to fall from high levels. More rigorous restocking activities will not resume until late October or early November.
Excluding south China and south-eastern coastal regions, China's aqua production shrank substantially nationwide due to falling weather temperatures. Bulk market releases during the holiday dragged aqua product prices down in the first half of the month.
In the ruminant market, October raw milk prices dipped slightly amid improved supplies, while finished milk product prices were mostly stable. Traditionally strong demand for beef and mutton in the autumn and winter season shored up ruminant meat prices with supplies struggling to keep pace. 
Post-holiday decline in animal inventories slowed feed production in October. Traders and livestock producers cut back on feed purchases partly because they had accumulated sufficient stocks before the holiday, and partly due to their anticipation that feed prices would fall over the coming period in the wake of cheaper corn and soymeal costs.
Market forecast
Overall, softer October livestock prices were seen as necessary corrections after the double festivals holiday season. Longer-term outlook for major livestock including hogs, broilers and layers should remain positive amid strong underlying supply-demand fundamentals.

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