October 27, 2011
China Feed Market Bi-Weekly Review: Feed costs stable in China; strong demand lifts production
An eFeedLink Exclusive
Fattening of animals before releases prior to Mid-Autumn Festival and National Day holidays, in conjunction with pre-festive stocking of feed, supported production to rise 3.77% while consumption increased 5.46% in September.
Market Analysis
Feed prices were relatively stable although ingredients costs remained high. Soymeal price increment slowed down considerably in September, while the sales of newly harvested corn in central and south China helped to contain the price hikes of this feed ingredient. Meanwhile, prices of fishmeal continued to decline, hitting a low of RMB7,800/tonne, in the first half of September but showed signs of strengthening after middle of the month. Rapeseed meal market was under pressure as aquaculture wound down for the season while cottonseed meal supplies increased with the recent harvest.
Adverse weather conditions continued to pose challenges to animal farming. In Yunnan and Guizhou, southwest of China, droughts remained severe, affecting 88 cities, counties and districts in total. Northeast and northwest China started to snow during September, with one county in Shanxi province experiencing the heaviest and earliest snow in 60 years.
Year-on-year, feed consumption and production were higher by 7.09% and 4.74% respectively.
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Table 1：Percentage change of China's feed production and consumption in Sep 2011 | |||||||
|
　 |
Hog feed |
Layer feed |
Broiler feed |
Aqua feed |
Ruminant feed |
Others |
Total |
|
Feed production, percentage change on-month |
4.30 |
6.15 |
3.78 |
0.01 |
4.11 |
1.41 |
3.77 |
|
Feed production, percentage change on-year |
0.51 |
9.20 |
14.22 |
-6.35 |
10.72 |
5.19 |
4.74 |
|
　 |
　 | ||||||
|
Feed consumption, percentage change on-month |
5.92 |
8.09 |
5.92 |
0.81 |
5.63 |
3.13 |
5.46 |
|
Feed consumption, percentage change on-year |
2.66 |
11.9 |
17.79 |
-5.44 |
12.89 |
7.37 |
7.09 |
|
eFeedLink's statistics | |||||||
Hog feed
Hog prices continued to rise with the support of strong demands before Mid-Autumn Festival and National Day holidays. However, hog inventories increased marginally by less than 1% due to short supplies of piglets. Moreover, hog producers were cautious with herd expansion, fearing that the government's releases of pork reserves would soften prices in the coming months, especially as markets in some regions showed signs of weakening toward late September.
Hog feed demand increased at a moderate rate 5.92% on-month, which was 2.66% higher than last September. Production was 4.30% higher than August and a slight increase of 0.51% on-year.
Layer feed
Egg production, which peaks during autumn, improved substantially in September, weighing down egg prices with increased supplies. Nonetheless, long-term profits of layer farms remained at record high levels, encouraging farms to expand inventories. This, together with higher feed intake of layer hens, stimulated layer feed consumption to rise more than 8% on-month, lifting output by 6.15%.
Year-on-year, layer feed consumption and production increased 11.90% and 9.20% respectively.
Broiler feed
Higher release volumes of broilers during September weakened the market. However, despite sliding prices, broiler inventories increased over 2%. Fattening of broilers before releases and the rise in broiler numbers supported consumption to increase 5.92% while production rose 3.78%.
As broiler inventories expanded by over 7% compared with a year ago, feed demand and output increased prominently by 17.79% and 14.22% respectively.
Aquaculture feed
Aqua feed consumption and production stayed flat in September. The pleasant climate during August was short-lived as early snowfalls in northern China hastened the end of aquaculture in the region. The shrink in aqua inventories was especially sharp toward late September when temperature drops were prominent, reducing the monthly feed demand for aqua feed in northwest China by over 10%.
Year-on-year, aqua feed consumption was lower by 5.44% while production shrank 6.35%.
Ruminant feed
Prices of beef cattle increased significantly during August and September, prompting farmers to release animals to reap profits. This was detrimental to the industry, which was already facing diminishing cattle herds amid weak inventory building interest.
Nevertheless, dairy cattle industry was enjoying stable growths, hence underpinning the demand for ruminants feed. Consumption rose by 5.63% compared with August while production increased 4.11%. Year-on-year, ruminant sector consumed 12.89% more feed while production expanded by 10.72%.
Market forecast
As the weather temperatures drop in October, aqua feed demand will dwindle further. Meanwhile, hog inventories are unlikely to increase significantly with piglet supplies limited. Consequently feed demands from these two sectors are unlikely to be strong. Although poultry inventories grew steadily over the past few months, the high releases of broilers in September will decimate feed consumption in the first few weeks of October. Overall, feed production is expected to grow marginally at best.
Entering November and December, China is likely to face power insufficiencies as electricity usage increases. Feed manufacturing will be restricted by the country's power rationing, should the shortage be severe.
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