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.
Since the third quarter, soybean meal in feed raw materials showed a strong upward trend. According to Zhuo Chuangs statistics, after the National Day holiday, domestic soybean meal futures opened high, rising 185 yuan / ton, or 6.01%, a new high in the year. As of October 19, the average price of domestic soybean meal was 3284 yuan / ton, up 131 yuan / ton or 4.15% compared with last years 3153 yuan / ton.
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.
Demand helps raise feed prices
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%.
According to statistics, since the beginning of September, the release of pig production capacity in the domestic market has accelerated. Zhuo Chuang monitors that the pig output of large-scale enterprises in the North increased by 34.93% month on month in September, and the pig output in October still showed a positive growth trend. Since October, the number of pigs in the southern market began to increase rapidly. In October, the number of pigs sold by large-scale enterprises in southern China increased by 22.52% month on month.
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%.
Zhuo Chuang data shows that after entering October, domestic pig prices have declined rapidly, and have rebounded slightly in recent two days. As of October 19, the average price of the three yuan market was 30.12 yuan / kg, down 3.16 yuan / kg or 9.50% from the beginning of the month.
Wang ruwen also said that the price of raw corn and soybean meal continued to rise, making the downstream breeding costs continue to increase, feed enterprises feel pressure, and have taken the seventh price increase measures this year. As the number of live pigs and reproducible sows increased greatly, and the year-on-year increase in the emergence of large broiler chickens kept rising, the prices of pigs and broilers fell one after another. Under the circumstances of rising and falling, the profit of terminal breeding was suppressed.
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
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.