November 12, 2020
China Animal Health Update (December 2020)
An eFeedLink Exclusive
November is considered an autumn month in China, with northern regions entering early winter. Provided there is heating support in the housing environment, the production process is relatively smooth, with low disease incidence, low mortality, high feed intake, and high returns for the producer. While COVID-19 has been effectively kept out of China's borders, imports of contaminated frozen foodstuffs still pose a significant risk,and has impacted the domestic meat market.
In November, China's live swine inventory continued its uptrend, and the number of market hogs also increased, further narrowing the supply-demand gap. Although the combined effects of increased pork consumption and the reluctance of some producers to sell their herds is resulting in some market fluctuations in the short term, the general trend in swine prices is downwards. Current pork prices vary across regions, but with prices at RMB30 per kilogram or more, there is still significant restraint on pork consumption. As swine supplies continue to rise, it is expected that swine prices would trend downwards into December. However, with the rise in production costs, coupled with pork import restrictions, it is unlikely that we would see a sharp price fall.
According to data from the Ministry of Commerce, China's total meat imports in the third quarter was 7.41 million tonnes, a 72% rise from last year, and it is forecast that imports for the whole year would reach a record 9.5 million tonnes, with most imports coming from Europe.
As of the end of the third quarter this year, China's total live swine inventory was 370 million head, an increase of 20.7% from last year, the first year-on-year expansion since 2017. With an estimated current shortfall of 70 million head, swine production remains profitable in the short term.
As the winter-to-spring season approaches, it is worth noting the relative increase in disease incidence in swine. Sporadic cases of African swine fever (ASF) were reported in November. Before any vaccine can provide herd immunity, the current reliance on disinfection and quarantine means that the risk of ASF resurgence continues to exist. And due to COVID-19 contamination adding uncertainty to pork imports, it is expected that a return to pre-ASF swine prices would only come after mid-2021.
Broiler and egg prices in November were basically stable, with small fluctuations related to demand forces and imports. Specifically, egg prices trended higher with some decline, and broiler and day-old chick prices trended higher.
Data shows that China's current inventory of layers stands at 1.4 billion head, with productive hens making up 1.2 billion head, a four-year record high. Although egg production in northern China is falling and is entering off season, egg supplies are sufficient. With average demand and excess inventories, it is reasonable that egg prices would ease moderately, in the short term. As temperatures further decline, and prices of raw materials including soymeal and corn increase, pushing up production costs and reducing profitability, producers would be prompted to discard spent hens and reduce inventory. Overall egg prices would then be expected to strengthen.
As China enters winter, temperatures continue to fall, and poultry consumption would increase. Coupled with the recent rise in prices of corn and major raw materials, broiler production costs have increased, and it is expected that overall broiler prices would strengthen.
As temperatures fall, broiler productivity declines, but with ample breeder inventory, day-old chick prices in November were stable overall. Recently producers have been actively restocking, and it is expected that prices of day-old chicks would strengthen in the short term.
Respiratory diseases in poultry are common in winter, including infectious bronchitis, Mycoplasma and colibacillosis. It is necessary to think beyond drug use in disease prevention and control, focusing on the housing environment and on strengthening quarantine and disinfection - this is the future of disease control.
3. Government policies
On November 2, the Ministry of Agriculture and Rural Affairs issued a notice on establishing a national steering committee on animal nutrition. The committee would systematically carry out fundamental work including establishing a feed nutritional database and the assessment of nutrient requirements, speed up the promotion of technological systems for precision feeding, with the aim of improving cost-effectiveness and quality in the feed and livestock industry.
On November 9, The Joint Prevention and Control Mechanism of the State Council issued a work plan on preventive disinfection of imported cold chain food. The plan requires achieving complete traceability and control across a closed-loop supply chain to minimise the risk of COVID-19 transmission. Preventive disinfection would be carried out on cold chain food before their first contact with personnel. Batches which test positive would be returned or destroyed. For batches which test negative, the customs department would lead the disinfection of the inner container walls and outer food packaging.
All rights reserved. No part of the report may be reproduced without permission from eFeedLink.