Dim Sums: Agricultural Markets in China

Chinese hog prices have now fallen to their level of two years ago. After about 14 months at stubbornly high levels, pork prices are down more than half from their year-ago level, and officials are scrambling to mop up excess supplies. Officials worry that losses will lead to more gyrations in supply. Average wholesale prices reported by China Ministry of Agriculture and Rural Affairs. The swine inventory at the end of Q2 2021 was at its highest level in the last five years, according to data released by China's National Bureau of Statistics.  Calculated from China National Bureau of Statistics reports. The increase in the swine inventory during Q2 is remarkable given that the statistics bureau also reported a surge in hog slaughter during Q2--usually the off-season for hog slaughter in China. The surge of slaughter is consistent with monthly slaughter data reported by the Ministry of Agriculture and Rural Affairs which indicated 22 million head were slaughtered at "above-scal...

Epic flooding, drought, hungry caterpillars, and stubborn African swine fever have Chinese officials scrambling to shore up the fall grain harvest--just two months away. Torrential rains and catastrophic floods in Henan Province this week are the latest and most-publicized of a series of mid-summer extreme weather events that have affected most of China's major agricultural regions in 2021.  On July 21, Xi Jinping issued "important directives" to prevent casualties and property damage from the serious flooding in Henan. Noting that rivers are above their normal levels, dams are vulnerable, some trains have been stopped and flights have been canceled, the flood control situation was pronounced to be very severe. Soldiers were ordered to help with rescue and aid, and authorities were instructed to provide ample warning of heavy rain, typhoons, mountain torrents, and mudslides.  Flooding in Jiangxi Province. In June, Yicai reported that there was widespread flooding in In...

The latest data indicate China's demand for animal feed has kicked it up a notch this year.  With tight corn supplies, Chinese authorities are loosening the longstanding quota stranglehold on corn imports by allowing imports in "bonded zones" and turning to the international market to restock reserves.  May 2021 data from China's feed industry association suggest that the country's feed production has vaulted to a new level. China's feed production in the first five months of 2021 totaled 114 million metric tons, 21.5 percent ahead of last year. Monthly feed output is running 4-to-5 mmt ahead of same-month totals from each of the previous three years. Source: analysis of China feed industry association data.  The association says January-May 2021 swine feed production is up 75 percent from the same period last year. Jan-May swine feed output is also 10 mmt higher than the same period in 2018--before the African swine fever epidemic began. Poultry feed product...

Chinese leaders announced new farm subsidies this month that reflect worries about shrinking profits for scaled-up grain farms and farmer cooperatives. With costs escalating year by year, officials worry that newly-minted commercial farmers may abandon their land  if grain prices fail to keep rising.  Premier Li Keqiang squatted in a corn field for a photo-op with local officials and farmers  to announce a new one-time grain subsidy for 2021. In a carefully orchestrated visit to Jilin Province on June 15-16, 2021 Premier Li was photographed in a corn field where farmers assured him that another bumper harvest is expected this year. However, the farmers also complained that they were worried that increasing prices of fertilizer, fuel and other inputs will eat up profits from record-high corn prices.  According to Xinhua News Agency propagandists, Premier Li turned to comrades in his delegation and pronounced, "This is a key period for grain production; we m...

China's 14th five-year plan for Xinjiang Uighur Autonomous Region envisions great opportunities for development and westward-facing trade in the region--and the plan makes it clear that it has Xi Jinping's personal stamp of approval. The plan promises huge material economic progress, and it includes measures to ensure it is not impeded by social instability or threats to the communist party's leadership. The plan calls for expanding vocational training schools, reeducating ethnic minorities, and creating Islam with Chinese characteristics.  The Xinjiang plan is an exhausting catalogue of projects that goes on for pages and pages. They include high-tech industry clusters; petroleum- and coal-based chemicals; steel and nonferrous metals; upgrades of textiles and agricultural processing; new energy and e-commerce; industrial clusters and industry parks sprinkled across the desert; new roads, rails and canals crisscrossing the region; hordes of tourists; build new cities and s...

China's Heilongjiang Province announced that grain subsidies will be paid a month earlier than usual this year. Producer subsidies for corn, soybeans, and rice will be issued to Heilongjiang farmers by the end of August based on area they planted in the three crops.  Heilongjiang accounts for about 10 percent of China's grain output, and it produces the biggest surplus of grain to supply to other provinces. The producer subsidy policy is meant to encourage Heilongjiang farmers to produce by offsetting the province's low prices to generate better net returns. The amount of the subsidies will not be determined until August, but officials indicated the corn subsidy will be raised from last year while the soybean subsidy will be held steady. Last year's corn subsidy was 38 yuan per mu, and the soybean subsidy was set at 238 yuan per mu to stimulate more soybean production. This year the priority has switched to boosting corn output, with corn prices soaring and record corn...

Stratospheric Chinese hog prices helped float prices of feeds and meat upward last year, but sinking hog prices this year may be exerting a downward gravitational pull on other prices as hog farmers fall underwater. Hog prices reported by China's National Bureau of Statistics (NBS) in May 2021 were more than 50 percent below their early January level and are now below breakeven levels for wean-finish farms and at or near the breakeven point for farrow-finish farms in China. Farmers have been selling hogs in a panic as prices fall in the offseason for Chinese pork consumption. Last week's Beijing Xinfadi wholesale market report said mainly large carcasses are arriving--super-sized "second-time fattening" hogs--but very small carcasses are also arriving as farmers slaughter immature animals to cut their losses. Another industry report commented that a fattened hog brought 3000 yuan in profit last year, but now loses 1000 yuan.  Source: China National Bureau of Statist...