Soybean meal and corn soar, feed prices rise, pass on to farmers

category:Finance
 Soybean meal and corn soar, feed prices rise, pass on to farmers


Feng Yonghui, an analyst at sozhu.com, told the securities times. E company that the recent sharp rise in agricultural prices is closely related to the strong demand for downstream products. Under the sharp increase of cost, the price of feed products also went up obviously. In addition, the sales volume increased, so the profit level of feed enterprises was acceptable. However, under the background of rapid decline in pig prices, high cost pressure has formed an impact on farmers.

Prices of a variety of agricultural products went up

Similarly, as a large proportion of feedstuff raw materials, corn prices have almost shown a unilateral upward trend since this year. Since January this year, corn futures prices have risen by more than 40%.

Since October, corn prices in the southern market have increased by 100-170 yuan / ton compared with those before the festival. The prices of corn in the new season did not fall but rose instead. The new grains in the production areas were not on the market quickly, and the downstream supply was tight. The situation of tight supply pushed up the corn market prices. According to the monitoring, as of October 16, the national corn price closed at 2386.5 yuan / ton, up 5.74% month on month and 31.36% year on year. Chen Qingqing, an analyst with Zhuo Chuang, said that the harvest progress was affected by lodging and precipitation in the production area objectively, and the acquisition of traders and deep processing factories had a positive impact on the subjective aspect. The new grain listing rhythm was slow, which strengthened the situation of tight market supply in the marketing area. From the perspective of sales areas, this year, the main corn production areas in China have maintained a stable price front, and grain in Northeast China has remained at a high level, which has boosted grain sources in other regions.

Also affected by the tight supply, the price of domestic soybean has been soaring this year. Li Bing, an analyst with the business agency, said that the domestic soybean price has been soaring since March. In September, the price of domestic soybean has reached 2.6 yuan / Jin. In October, the price of soybean was 2.1 yuan / Jin, up 0.3 yuan / Jin compared with the previous 1.8 yuan / Jin. Due to the relatively small number of soybean on the market in the new season and the high enthusiasm of terminal purchase, the price of domestic soybean continued to rise, reaching about 2.2 yuan / Jin.

The rising prices of soybean meal, corn and other feed raw materials are closely related to the surge in downstream demand.

Ma Liyuan, an analyst with Zhuo Chuang, said that since the outbreak of non plague on August 3, 2018, the production capacity of pigs in Northeast China decreased by about 60%. In March 2019, retail investors and large-scale farms began to try to resume production, but the success rate was not high. By the end of the year, there were still local outbreaks. Since 2020, the plague situation in northeast Africa has been effectively controlled, and the recovery speed of production capacity has been accelerated. So far, the overall pig stock has recovered to about 70% of that before non plague, and 80% - 90% in some areas. The recovery speed of scale farms is faster than that of retail investors. In South China, the recovery rate is relatively slow, and most of them are less than 50%.

After the low price in May, the domestic pig price remained high from June to July, and the enthusiasm of secondary fattening was high. The enthusiasm of fattening households to catch up with the market and make up the hurdles was significantly improved. Most fattening households add 70 kg to 90 kg of commercial pigs, while the intended weight is 140 kg-150 kg. September to October is just the time node for the second fattening and marketing. The rapid marketing of secondary fattening pigs is another major factor leading to the increase of market supply.

The main reason for the rise of soybean meal market, on the one hand, comes from the rising cost side of US soybean futures, on the other hand, the domestic demand side data is also brilliant. According to the data of China Feed Industry Association, the domestic feed output data kept increasing for five consecutive months, said Wang ruwen, an analyst with zhuocao. As of September 2020, the total domestic feed output was 24.4 million tons, with a month on month increase of 6.2% and a year-on-year increase of 18.1%.

At present, the average price of domestic pigs has basically fallen below 30 yuan / kg, and the ratio of pig to grain has also declined rapidly, which is less than 13:1 at present. Feng Yonghui said that as an important indicator to measure the profit level of pig breeding, pig to grain ratio is the ratio of pig price to corn price as the main feed for pigs. When the ratio of pig price to corn price is 6:1, pig breeding is basically at break even point. The higher the ratio of pig to grain, the better the breeding profit, otherwise the worse. At present, the profit of pig is more than 1000 yuan under the condition of self breeding, and the current pig price has basically fallen to the fattening cost line.

Ma Liyuan believes that in the fourth quarter of 2020, the market supply and demand in Northeast China will gradually balance, and the price is likely to decline. By the end of the year, the pig price in Northeast China will be the lowest or will drop to about 24 yuan / kg.

Feed enterprises looking for substitutes

With the rise of corn price, downstream feed enterprises began to actively inquire for substitutes, among which old rice and old wheat were the most concerned.

Chen Qingqing said that the ex warehouse price of old rice in Hunan Province was 1750 yuan / ton. In the early stage, because the downstream feed enterprises had a periodic bearish expectation on the new season corn after listing, and also affected by factors such as unstable quality of old rice, the intention of enterprises to purchase old rice was general, and with the continuous rise of corn price, manufacturers gradually favored the old rice.

On October 21, at a press conference held by the Ministry of agriculture and rural areas on the agricultural and rural economic situation in the first three quarters of 2020, Wei Baigang, chief economist of the Ministry of agriculture and rural areas, said that recently, due to the rise of corn prices, enterprises have to some extent purchased wheat as feed. From the experience, wheat price is the ceiling of corn price. The increase of wheat feed amount will restrain the rise of corn price, and the decrease of corn price will cause feed enterprises to reduce the use of wheat. Therefore, in the long run, it is unlikely to replace corn with wheat.

Is there still room for upward trend of corn price after breaking through the early high point?

Previously, the price of corn has been between 2 yuan and 2.1 yuan / kg for a long time, but the average price of corn in many places has reached 2.5 yuan / kg, which is not far away from the historical high price of 2.8 yuan / kg. Feng Yonghui said that in the short term, the current market demand continues to be strong, there is still room for corn prices to rise, but breaking the previous record is still a small probability event. Chen Qingqing also believes that from the spot price point of view, the northeast corn price is at the highest level, which forms a support for the corn price in other production areas, and the price support front of the production area is relatively stable. Comprehensive price comparison shows that the low price of corn production areas in China is basically in the northwest region, some large-scale feed factories have entered the production area for acquisition, and the corn price in the low-cost area has continued to rise. In the short term, the slow increase in the production area and the replenishment of the downstream feed enterprises will make it difficult for the production areas to find a breakthrough in the supply of low-cost goods. The corn price is still dominated by high-level consolidation. However, under the current price, the substitution effect of old rice and wheat for corn has appeared, which has formed a constraint on the corn price. At present, the corn price in the southern market has basically reached a stage high. Source: Securities Times editor in charge: Yang Bin_ NF4368

Previously, the price of corn has been between 2 yuan and 2.1 yuan / kg for a long time, but the average price of corn in many places has reached 2.5 yuan / kg, which is not far away from the historical high price of 2.8 yuan / kg. Feng Yonghui said that in the short term, the current market demand continues to be strong, there is still room for corn prices to rise, but breaking the previous record is still a small probability event.

Chen Qingqing also believes that from the spot price point of view, the northeast corn price is at the highest level, which forms a support for the corn price in other production areas, and the price support front of the production area is relatively stable. Comprehensive price comparison shows that the low price of corn production areas in China is basically in the northwest region, some large-scale feed factories have entered the production area for acquisition, and the corn price in the low-cost area has continued to rise.

In the short term, the slow increase in the production area and the replenishment of the downstream feed enterprises will make it difficult for the production areas to find a breakthrough in the supply of low-cost goods. The corn price is still dominated by high-level consolidation. However, under the current price, the substitution effect of old rice and wheat for corn has appeared, which has formed a constraint on the corn price. At present, the corn price in the southern market has basically reached a stage high.