A China agriculture ministry review of 2018 market conditions highlighted adequate supplies, stable prices, limited impacts of trade tensions and African swine fever, progress in reforming grain price policies and promised continued disposal of excess corn and rice stockpiles. Steep declines in vegetable prices during 2018 were attributed to normal seasonal factors. Stability now may foreshadow future deficits when the government's corn stockpile is finally depleted and pork supplies could shrink as pessimistic farmers worried about African swine fever hesitate to restock pig barns.
Tang Ke, director of the market information office of China's Ministry of Agriculture and Rural Affairs, reviewed agricultural market developments during 2018 and discussed the outlook for 2019 at a press conference held in Beijing today.
During 2018, China's corn sector revolved around efforts to dispose of massive government stockpiles. Auctions of government corn reserves sold over 100 million metric tons, and corn processing capacity was expanded in northeastern provinces. Mr. Tang said China's consumption of corn exceeds its production. There were no major fluctuations in corn prices, but the December 2018 average wholesale price in production regions (1880 yuan/mt) was up 11.9 percent year-on-year and the December price in corn deficit regions (2060 yuan/mt) was up 9.6 percent.
Tang indicated that disposal of excess corn stocks would continue at a rapid pace during 2019 and might be completed this year as inventories return to "normal" levels. He anticipates that market forces might prompt a rebound in corn planting this spring, reversing the recent trend. Tang expects Chinese corn prices to remain stable or to increase slightly during 2019.
China's minimum prices for wheat and rice have been reduced as part of the reform of the government reserve procurement system. Wheat and early rice prices fell at the outset of the 2018 marketing season, but later rebounded to levels at or above the minimum prices. The 2019 minimum price for wheat was announced to be 1.12 yuan per 500g. The minimum prices for rice will be announced around the upcoming spring festival and are expected to be "stable", Tang said. Rice prices may be under downward pressure due to large government stockpiles, Tang said, but wheat supply and demand are "in balance" due to decline in quantity and quality of last year's wheat crop.
China's soybean imports fell during 2018 due to the 25-percent tariff on U.S. soybeans imposed in July, but there were no major fluctuations in Chinese soybean prices. Mr. Tang attributes relatively stable Chinese soy prices to adoption of low-protein feed formulations, weak downstream demand, and more protein sources. Tang thinks China's volume of soybean imports will remain steady during 2019. With large U.S. inventories and possible weather impacts on the South American crop, Mr. Tang promised to carefully monitor the international soybean market and issue regular reports on developments.
China's pork market opened 2018 with several months of plunging prices but prices were relatively stable in the second half of the year, Tang said. The average hog price fell four weeks in a row to 13.65 yuan/kg in the second week of January 2019, 11.2 percent below the price a year ago. The spread of African swine fever beginning in August prompted tight controls on transport of live pigs and a shift from transporting hogs to transporting pork. This caused declines in prices in production regions and moderate increases in consuming regions but no major impact on prices yet, Tang said. The average slaughter weight in December was a record 124.27 kg per head and hog slaughter was up 9.5 percent from the previous month. Consumer demand is relatively weak. The volume of pork traded in markets monitored by MARA was down 14.4 percent year-on-year. Tang anticipates relatively stable prices during the peak consuming period for the lunar new year holiday.
Tang anticipates tighter pork supplies and rising prices in the second half of 2019. The December inventory of hogs was down 4.8 percent from a year earlier and the inventory of productive sows was down 8.2 percent. The average price for feeder pigs is down 27.4 percent year-on-year, an indicator that hog farmers are not replenishing their herds, foreshadowing tight supplies later in the year. Tang encouraged farmers to re-stock their herds while paying close attention to control of African swine fever. Local officials have been advised to adopt measures to maintain pork supplies by addressing farmers' worries about restocking their herds.
Mr. Tang attributed strong prices of poultry, beef, and mutton to their role as substitutes for pork and seasonal factors affecting supply.
Tang Ke, director of the market information office of China's Ministry of Agriculture and Rural Affairs, reviewed agricultural market developments during 2018 and discussed the outlook for 2019 at a press conference held in Beijing today.
During 2018, China's corn sector revolved around efforts to dispose of massive government stockpiles. Auctions of government corn reserves sold over 100 million metric tons, and corn processing capacity was expanded in northeastern provinces. Mr. Tang said China's consumption of corn exceeds its production. There were no major fluctuations in corn prices, but the December 2018 average wholesale price in production regions (1880 yuan/mt) was up 11.9 percent year-on-year and the December price in corn deficit regions (2060 yuan/mt) was up 9.6 percent.
Tang indicated that disposal of excess corn stocks would continue at a rapid pace during 2019 and might be completed this year as inventories return to "normal" levels. He anticipates that market forces might prompt a rebound in corn planting this spring, reversing the recent trend. Tang expects Chinese corn prices to remain stable or to increase slightly during 2019.
China's minimum prices for wheat and rice have been reduced as part of the reform of the government reserve procurement system. Wheat and early rice prices fell at the outset of the 2018 marketing season, but later rebounded to levels at or above the minimum prices. The 2019 minimum price for wheat was announced to be 1.12 yuan per 500g. The minimum prices for rice will be announced around the upcoming spring festival and are expected to be "stable", Tang said. Rice prices may be under downward pressure due to large government stockpiles, Tang said, but wheat supply and demand are "in balance" due to decline in quantity and quality of last year's wheat crop.
China's soybean imports fell during 2018 due to the 25-percent tariff on U.S. soybeans imposed in July, but there were no major fluctuations in Chinese soybean prices. Mr. Tang attributes relatively stable Chinese soy prices to adoption of low-protein feed formulations, weak downstream demand, and more protein sources. Tang thinks China's volume of soybean imports will remain steady during 2019. With large U.S. inventories and possible weather impacts on the South American crop, Mr. Tang promised to carefully monitor the international soybean market and issue regular reports on developments.
China's pork market opened 2018 with several months of plunging prices but prices were relatively stable in the second half of the year, Tang said. The average hog price fell four weeks in a row to 13.65 yuan/kg in the second week of January 2019, 11.2 percent below the price a year ago. The spread of African swine fever beginning in August prompted tight controls on transport of live pigs and a shift from transporting hogs to transporting pork. This caused declines in prices in production regions and moderate increases in consuming regions but no major impact on prices yet, Tang said. The average slaughter weight in December was a record 124.27 kg per head and hog slaughter was up 9.5 percent from the previous month. Consumer demand is relatively weak. The volume of pork traded in markets monitored by MARA was down 14.4 percent year-on-year. Tang anticipates relatively stable prices during the peak consuming period for the lunar new year holiday.
Tang anticipates tighter pork supplies and rising prices in the second half of 2019. The December inventory of hogs was down 4.8 percent from a year earlier and the inventory of productive sows was down 8.2 percent. The average price for feeder pigs is down 27.4 percent year-on-year, an indicator that hog farmers are not replenishing their herds, foreshadowing tight supplies later in the year. Tang encouraged farmers to re-stock their herds while paying close attention to control of African swine fever. Local officials have been advised to adopt measures to maintain pork supplies by addressing farmers' worries about restocking their herds.
Mr. Tang attributed strong prices of poultry, beef, and mutton to their role as substitutes for pork and seasonal factors affecting supply.
Comments