CHINA - Looking at the size of the breakdown of the inventory for June, 2013-breeding stock was around 50.68 million sows and total on farm inventory was around 442.60 million (as compared to May 2013-breeding stock was around 50.73 million (June is flat with May-down 0.1 per cent) and total on farm inventory was around 437.23 million (June is up 1.0 per cent from May), writes Ron Lane, Senior Consultant for Genesus China.
The 442.60 million head for June is down 0.3 per cent from last year while the June sow inventory of 50.68 million is up 1.40 per cent from last year (year over year). Since October 2012, there has been about a 6.1 per cent drop in total on farm inventory ( October 2012-total on farm inventory of 471.41 million head versus June 2013 total on farm inventory of 442.60 million head), yet the sow inventory has remained quite flat ( 50.94 million sows in October 2012 versus 50.68 million in June 2013).
Market pig slaughter for first 6 months of 2013 is 342.11 million head, an increase of 1.1 per cent as compared to first 6 months in 2012. The total for 2012 was 714.27 million head (Note: A more recent report indicated that the total volume of pigs raised and marketed in China during 2012 was 696.28 million. This represents about one half of the pigs marketed in the world, but it stills show poor reproductive performance—about 13.93 pigs marketed per sow per year.
For June 2013, the national average market price for live pigs was 14.10 RMB/kg ($2.30 US/kg-$1.04 US/lb.). This is an increase of 10.4 per cent over last month and a rise of 0.4 per cent from June 2012. The average price of live pigs was higher in the northwest region, at 14.75RMB/kg ($2.40 US/kg-$1.09 US/lb.) and the southern region was lower at 13.48 RMB/kg ($2.20 US/kg-$1.00 US/lb.).
The June monthly average price for pork was 22.81 RMB/kg ($3.72 US/kg-$1.69 US/lb.); up 6.2 per cent from last month and a rise of 0.1 per cent as compared to last year. The northwest regional average price for pork was higher at 24.36 RMB/kg ($3.97 US/kg-$1.80 US/lb.) while the southern region was lower, at 22.00 RMB/kg ($3.59 US/kg-$1.63 US/lb.). Monthly average price for piglets was 27.09 RMB/kg ($4.42US/kg-$2.00US/lb.); up 8.8 per cent from last month, but down 11.3 per cent from last year.
Since the end of January 2013 and for 15 consecutive weeks, the price of live pigs declined by 27.4 per cent. Then for seven weeks, since the 3rd week of May, the price has increased 13.4 per cent. Pork prices have, since the second week of February, dropped by 20.5 per cent for 14 consecutive weeks. Since the fourth week of May, the price has rebounded for six consecutive weeks by an increase of 8.3 per cent.
Profit margins are now showing marginal positive returns and are improving since our last report. At the end of June, the estimated losses from pig production were 26 RMB/market pig ($4.24 US/market pig). At the end of April, the estimated national losses were around 139 RMB/market pig ($22.66 USD/market pig) (as compared to the end of March when losses were 260 RMB/head ($42.39 USD/head). As of 9 January 2013, the profit margin was approaching 360 RMB/head-$58.70 USD/head marketed from a farrow to finish production unit. Average profit for 2012 was estimated at 177 RMB/ market pig-$ 28.86 US.
The national pig to grain ratio for June 2013 was 5.76:1 up 0.48 points from the monthly average for May 2013. On 23 May, the pig to grain price ratio was 5.44:1 as compared to 10 April 2013 with a 5.24:1; with 3 March with a 5.97:1 and as compared to January 13th, when the ratio was at 7.52:1. A ratio of 6.00:1 is considered breakeven). During the second week of July, the pig to grain ratio was 5.99:1-and thus breakeven.
Market pig prices have increased since 10 May, when the market price was 12.66RMB/kg ($ 2.06 US/kg-$0.94 US/lb.) to 10 July, when the price was 14.22 RMB/kg ($ 2.32 US/kg-$ 1.05US/lb.). This is an increase in market price of 12.08 per cent. Before that, the market pig price had continued to fall since the Spring Festival (early February). On 7 April, as the pig prices continued to stay low, the National Development and Reform Commission (NDRC) announced that they would purchase and store pork to help decrease supply and to stabilize the price of pork.
On 18 April 2013, the NDRC purchased 75,000 tons and the again on 9 May, they purchased 93,700 tons. The NDRC on 22 May, announced that national plans to control the market is gradually “emerging”, as the national hog prices have risen for 3 weeks and the downward trend has been curbed. (On 30 April, it was the lowest point in market pig prices since January 2011 and since Spring Festival in this year, the market price is down 18 per cent). Part of the NDRC plan includes an early warning of the market price of live pigs that will provide timely information to farmers so that they can adjust pig production during the cyclical price and production movements. As well, the NDRC will continue to purchase and store frozen pork into reserve to help control price fluctuations.
For the month of June, the national corn average price was 2.45 RMB/kg ($0.40 US/kg-$0.18 US/lb.), up 0.8 percent from last month and down 1.6 per cent from last year. The three main producing areas of the three northeastern provinces, had an average corn price 2.19 RMB/kg ($0.36 US/kg-$0.16US/lb.), up 1.9 percent from the previous month; Guangdong province had a high price of 2.62 RMB/kg ($0.432 US/kg-$0.19 US/lb.), unchanged from last month.
The national average price for soybean meal was 4.30 RMB/kg ($0.70US/kg-$0.32/lb.), up 2.4 percent from May and up 16.8 per cent compared to last year. The average price of finishing pig feed was 3.29 RMB/kg ($5.4US/kg-$0.24 US/lb.) an increase of 0.6 per cent since May and a year on year rise of 5.4 per cent. Current price for corn is about 2.36 RMB/kg ($0.38 US/kg-$0.17/lb.); wholesale soybean meal is about $3.27 RMB/kg ($ 0.53US/kg-$0.24US/lb.) and retail soybean meal is about 4.23 RMB/kg ($0.69US/kg-$0.31 US/lb.).
Pork is estimated to be about 1/3 of the food portion of the basket or in other words, about 8 to 10 per cent of CPI as a whole. Thus, with these calculations in mind, the price of pork in the entire CPI weighs between 2.5 per cent to 3 per cent. This level is much larger than the world's major pork producing and consuming countries, such as Japan (0.66 per centfactor), United States (0.34 per cent factor) and in Germany (0.71 per cent factor) on CPI.
Currently, inflation was around 3.2 per cent for February (a 10-month high), 2.1 per cent for March, 2.4 per cent for April, 2.1 per cent for May and 2.7 per cent for June 2013. In June, pork prices increased by 4.6 per cent and this affected the CPI index by 0.13 per cent. In April and May, lower consumption was mainly due to the reaction and fear of dead pigs floating in the Huangpu River and due to the bird flu risk and its effect on all meat consumption. These factors had lowered the CPI.
The summer report for grain harvest is reported to be 131.89 million tons, 1.96 million tons more than last year (an increase of 1.5 per cent). Summer rapeseed production is 13.48 million tons, 450,000 tons more than last year (an increase of 3.4 per cent).
For the first one half of 2013, the total meat production for pigs, sheep and poultry production was 39.16 million tons (down 0.2 per cent as compared to 2012). Total pork production was 26.14 million tons (up 1.0 per cent from the same time period in 2012).
Also, in 2012, China imported about 522,000 tonnes of pork (an increase of 11.7 per cent from 2011). The value of this pork was 980 million USD (an increase of 15.7 per cent compared to the value in 2011 and with an average price of $1,877.40 USD/tonne-up 3.6 per cent from last year). The EU shipped 269,000 tonnes (51.4 per cent of the total volumne); the US shipped 187,000 tonnes (down 26.1 per cent from 2011) and Canada shipped 53,000 tonnes (up 7.5 per cent from 2011).
AgFeed USA, part of the holdings of AgFeed Industries of China, has filed for Chapter 11 bankruptcy protection. Maschoffs, a family owned pork production operation with more than 230,000 sows, is planning to purchase most of the US assets for 79 million. AgFeed also plans to sell their holdings remaining in the US plus those found in China (not part of the bankruptcy). AgFeed ran into difficulty as a result of a dispute when it ended a supply contract with Hormel Foods, Inc. (Arbitration award against AgFeed for 7.9 million USD).
|Genesus Global Market Report|
Prices for the week of 5 August 2013
(Liveweight a lb)
|USA (Iowa-Minnesota)||99.75 USD/lb carcass||73.82¢|
|Canada (Ontario)||190.26 CAD/kg carcass||66.87¢|
|Mexico (DF)||24.17 MXN/kg liveweight||86.17¢|
|Brazil (South Region)||2.94 BRL/kg liveweight||57.65¢|
|Russia||74 RUB/kg liveweight||$1.02|
|China||15.46 RMB/kg liveweight||$1.15|
|Spain||1.49 EUR/kg liveweight||89.32¢|
|Viet Nam||42,500 VND/kg liveweight||91.50¢|
|South Korea||3,747 KRW/kg liveweight||$1.52|
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