December 16, 2008
China Feed Market Bi-Weekly Review: Hog feed demand increased with sustained interest in hog rearing activities


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Prices of pork, broiler meat and eggs rose slightly during the first half of December. However, increased use of self-formulated feed reduced the demand for compound feed. Hog feed demand grew at a steady pace while demand for broiler feed and layer feed fell.



Market Analysis


Hog feed

Hog prices grew by about RMB2/kg during the first half of the month. Prices were higher in southern China amid tight supplies and increased demand as the locals purchased more pork for the making of waxed meat.

Hog prices also climbed in the north with the increase of cross-province trade from northern China to southern China.

High hog inventories and farmers' eagerness to fatten their hogs prior to the Spring Festival in late January led to a stable increase in hog feed demand.

However, lower corn prices and farmers' preference to self formulate feed with cheaper soymeal and other protein meals limited the rate of increase of compound hog feed demand.


Layer feed

The effects of the melamine scandal have cooled down and more Chinese were more willing to purchase eggs.

At the same time, the cold winter temperature resulted in lower egg-laying rates while egg demand increased amid the traditional peak egg consumption season during winter. Food processing corporations were also purchasing more eggs to prepare for the manufacture of food products for the approaching Spring Festival. As egg demand exceeded egg supplies, egg prices increased and enabled some layer farmers to reap a small amount of profits during the last two weeks.

However, the cold winter temperature also brought about a fall in layer feed intake among the layers. There was also more rapid elimination of layers as farmers tried to reduce disease risks in their farms.

A fall in layer inventories led to lower demand for layer feed. Also, more layer farmers chose to formulate their own feed with the availability of cheap corn in the market. This further reduced the demand for layer feed.


Broiler feed

Broiler prices increased during early December amid tight broiler supplies and increased broiler demand by slaughterhouses. However, there were excess inventories of frozen broiler products in the market. At the same time, consumers have not started stocking up broiler meat products. These factors thus caused broiler prices to fall in some regions towards close of week ending Dec 14.

In southern China, higher broiler prices encouraged broiler farmers to spend more on compound feed to fatten their broilers in preparation for release prior to the Chinese New Year.

In northern China, low weather temperature increased broiler rearing difficulties and broiler rearing costs. Higher broiler mortality rates and farmers' reluctance to replenish led to a fall in broiler inventories and a consequent dip in broiler feed demand.

Overall, broiler feed demand fell during the first half of the month.


Aqua feed

Aquaculture rearing activities have ceased in all regions apart from Guangdong, Fujian, Hainan and Yunnan. Demand for aqua feed improved as compared to previous weeks and led to a small increase in aqua feed prices.



Market forecast

Animal rearing activities are seen to gain speed during the second half of the month. This will most likely lead to an increase in animal feed demand.
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