October 18, 2008
 
China Feed Market Bi-Weekly Review: Feed demand weaker on dampening market factors
 
An eFeedLink Exclusive
 
 
Increased releases of livestock and aquaculture prior to the National Day holidays led to lower animal inventories after the festival. This caused feed demand to fall.

At the same time demand for feed was also affected by factors like the releases of new corn crops, the plunge in prices of soymeal and other protein meals, increased production of self formulated feed and a rise in demand for feed concentrates.

Also, lower prices of raw materials for feed prompted feed producers to reduce the selling prices of their feed products.

Such situations led feed traders and livestock farmers to hold back on purchases in anticipation of lower feed prices in the coming weeks. This in turn dragged feed production lower during the first half of the month.
 
 
Market Analysis
 
The global financial meltdown influenced prices of major raw materials for feed to fall. In China, soymeal prices fell from RMB3,750/tonne during end September to RMB3,200/tonne on October 15. Prices of rapeseed meal, corn and fishmeal also declined as well.

Lower costs of raw materials for feed enabled prices of processed feed to fall. Although the price fall margin of processed feed was not as much as the price reductions of raw materials for feed, the savings were enough to lead to an increase in animal rearing profits, therefore improving livestock rearing conditions during the first half of the month.
 
Hog feed
 
Hog prices initially fell after the National Day holidays before stabilising. Lower feed prices reduced hog rearing costs, but backyard farmers were still unable to make sufficient profits.

As many farmers were preparing to rear animals ready for release for the Lunar New Year in January next year, piglet replenishment has improved as compared to the period before the National Day holidays.

Overall however, hog inventory was still on the low side and hog feed demand remained weak.
 
Layer feed
 
Layer chicken production was higher in eastern and northern China.

As opposed to layer chickens however, rearing activities for layer ducks did not improve much.

Layer poultry activities were stable overall, therefore enabling firm demand for layer feed.
 
Broiler feed
 
Tight broiler supplies caused broiler prices to rise since end September. Higher prices encouraged increased broiler production. However, losses incurred in the earlier period had led to lower broiler hen replenishment. Consequently, the volume of chicks available for replenishment during the first half of October was low. Hence, despite increased demand for day-old broiler chicks, the actual increase in replenishment volume was small.

Higher broiler release volume after the National Day holidays and a weak improvement in broiler replenishment caused broiler feed demand to fall during the first half of the month.
 
Aqua feed
 
Aquaculture rearing activities slowed down due to lower weather temperature. In regions like north-western China, Inner Mongolia, Heilongjiang, aquaculture farmers have stopped production. This has caused aqua feed demand to fall significantly.

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