Tuesday, August 5, 2008

Livestock/feed sector news

Some news gleaned from a late July feed industry report from China

China’s Commerce Ministry imported 200,000 metric tons of U.S. pork as a buffer to ensure pork price stability during the Olympics. The report notes that 40,000 mt went to a company in Jinan, Shandong Province (Wei’er kang = Wellcome? Foods).

In Anhui and Hubei Provinces (central China) there are rumors of spreading “high fever sickness” among hogs.

Hog prices have been slowly declining for months, but the ratio of hog-feed prices is still well above the historical average. Chicken prices are down slightly and egg prices up slightly. Beef and mutton mostly stable.

In southern China the effects of typhoons (transportation limited, high temperatures, high humidity that promotes disease) have induced farmers to slaughter more animals. The report conveys a general sluggishness in livestock and feed industries in the south. They are past the seasonal peak and waiting for the build-up to the Chinese new year peak. Feed demand is sluggish in the south too, with feed inventories building. This translates to weak demand for corn to ship south from Dalian even though there has been some easing of freight rates.

Corn prices range from
$233/mt ($5.90/bu) in Heilongjiang
$256/mt ($6.50/bu) in Dalian
$279/mt at Shekou pork in Guangdong

On July 29, Anhui Province auctioned off 22,154 mt corn from state reserves. All of it sold, at an average price of 1792 yuan/mt ($265). Total planned auctions (timing of this is not clear—last Tuesday?) of state reserve corn have been 300,383 mt and they actually sold 82.17% of it, at an average price of 1568 yuan/mt ($232). (Last fall they had trouble finding buyers for state reserve corn)
In another part of the report, in connection with a national grain policy meeting held July 29, it says auctions of state reserve corn are planned for the south of 21,000 mt (Fujian, Guangxi, Hainan) and 300,000 mt in the four northeastern provinces.

According to news from the National Development and Reform Commission, 6 provinces in central China had a good harvest of summer grain (wheat and early rice):

Shanxi 2.59 mmt, up 16% from last year
1.17 mmt, up 4%
7.74 mmt, up 6.2%
30.6 mmt, up 2.2%
3.9 mmt, up 5.4%
9 mmt, up 5%

Northeast corn prices are flat at a high level (which explains the corn auction of 300,000 mt in northeast)

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