CHINA - Looking at the size of the breakdown of the inventory for October 2012, breeding stock was around 50.94 million and total on farm inventory was around 471.41 million (as compared to September 2012-breeding stock was around 50.79 million and total on farm inventory was around 470.94 million), writes Ron Lane, Senior Consultant for Genesus China.
For November 2012, the breakdown of the inventory for breeding stock was around 50.79 million (same as September 2012) and total on farm inventory was around 467.64 million. The 467.64 million head for November is down 0.2 per cent from last year while the November sow inventory is up 3.40 per cent from last year (year over year). For 2012, total farm inventory was projected to increase by 5 to 6 per cent but currently, it looks as if it will be flat. However sow inventory is up from last year. In 2011, the average inventory for breeding stock was 49.29 million and total on farm inventory was 468 million.
Profit margins are now showing positive returns. In November 2012, profit margins were showing a profit of 74 RMB/head-$11.90 USD/head average (but there was a vast range from losses of 200 RMB/head-$ 32.15 USD/head in some major pork production regions. At that time, many farmers were saying they were below breakeven. Other farmers indicated some profits getting to 100+ RMB/head-$ 16.08+ USD/head). Currently, profit margins have jumped. As of 9 January 2013, the profit margin was approaching 360 RMB/head-$57.88 USD/head marketed from a farrow to finish production unit. Just last week, the profit margin was estimated to be 254 RMB/head-$40.84 USD/head—up from 229 RMB /head-$36.82USD/head the week before. A major increase in only two weeks. At the end of March 2012 the profit margin was at 187 RMB/market pig-$30.06 US; down as compared to late January at 600 RMB/market pig-$ 96.45 USD. Average profit for 2011 was estimated at 500 RMB/ pig-$ 80.13 US.
|Price||January 9th, 2013||January 9th, 2012||% increase/decrease year-on-year|
|Pig Price||17.53 RMB/kg ($2.82 USD/kg)||17.27 RMB/kg ($2.78 USD/kg)||+1.5%|
|Pork price||25.27 RMB/kg ($4.06 USD/kg)||27.20 RMB/kg ($4.37 USD/kg)||-7.1%|
|Piglet price||24.62 RMB/kg ($3.96 USD/kg)||28.49 RMB/kg ($4.58 USD/kg)||-13.6%|
|Sow price||1,703 RMB/head ($273.79 US/head)||1,815 RMB/head ($291.80 US/head)||-6.2%|
What to watch for over the next few months!!!
This week, the pig to grain price ratio is 7.52:1; still about 4.6 per cent below last year levels. For January 2012, a 7.79:1 ratio was calculated. During the week of 15 November 2012, pig prices rose slightly and the main wholesale market for corn prices dropped even more and thus a pig to grain price was 6.53:1. Last week, the pig to grain price ratio was 7.23:1. It has been more than 12 consecutive weeks that the pig to grain ratio has been above the universally recognized breakeven point of 6.00:1 or better).
Last week, the average national corn price was 2.27 RMB/kg ($0.365 USD/kg), down 3.18 per cent from last year. The average national soybean meal price was 4.24 RMB/kg ($0.682 USD/kg), with a huge year-on-year rise of 32.09 per cent. The average national wheat bran price was 1.91 RMB/kg ($0.307 USD/kg) with an increase of 7.34 per cent from last year.
China, the world’s biggest importer of soybeans, boosted imports by 3.2 per cent in November as prices which dropped from a record high, spurred purchases. Shipments were 4.16 million metric tonnes, up from 4.03 million metric tonnes in October and compared to 5.7 million metric tonnes in November 2011. Imports in the first 11 months of 2012 rose 11.4 per cent to 52.5 million tonnes. China increased their imports of soybeans from Canada. From August to October 2012, China bought 538,000 tonnes of Canadian soybeans. In the 2011/2012 Canadian crop year, China only bought a total of 166,000 tonnes from Canada.
The Consumer Price Index (CPI) will become quite interesting for the National Government in the next few months. Rising food prices and especially increasing pork prices greatly affects the CPI. The CPI is made up of 30.49 per cent food found in the consumers’ basket. 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 1.7 per cent for October; 2.0 per cent for November and is estimated to be 2.3 per cent for December (with October being the lowest level-33 month low since February 2010). This is a drop from the high of 6.5 per cent in July 2011 (37 month high). Food prices are on the rise. The National Ministry of Finance reports that agricultural wholesale prices went up 6 per cent in December compared to November. Part of this is due to the long, colder spell of weather and its effect on fruit and vegetable production and transportation and increases pork consumption; the expanded use of pork for sausage making in the South of China, plus the common increase in demand of all foods just prior to Spring Festival. Millions of migrant workers will return home for the holidays with extra cash to purchase quality foods, especially pork. This will keep the price of pork and thus pig prices up for the next month.
In 2013, China will increase the use of feed wheat by 6 per cent to about 12.4 million tonnes. Most of the feed wheat will come through imports. China produced 118.1 million tonnes of wheat in 2012 (projected 118.3 million tonnes for 2013). However, consumption is estimated to increase to 119.6 million tonnes for 2013 (up from 119.1 million tonnes in 2012). The Ministry of Finance on 1 January, announced that the tariff on imported wheat is now 1 per cent.
From a report by Research and Markets, China’s meat (and by-products) industry was valued at 56.43 billion USD in mid-December-an increase of 22.1 per cent year-on-year. Total meat production was 79.57 million tonnes and pork was 50.53 million tonnes (63.5 per cent of the total meat produced). The net import of meat products was 1.569 million tonnes-an increase of 33.59 per cent.
The National Government has recently announced measure to reduce costs in supply chains. One measure has the power and water costs in production being lowered. Another lowers the tariff on farm tools including such items as automatic feeding, mixing and distribution systems. Both measures will have an impact on large-scale pig farms production costs.
|Genesus Global Market Report
Prices for the week of January 7, 2013
(Liveweight a lb)
|USA (Iowa-Minnesota)||84.13 USD/lb carcass||62.26¢|
|Canada (Ontario)||1.50 CAD/kg carcass||55.21¢|
|Mexico (DF)||23.70 MXN/kg liveweight||84.92¢|
|Brazil (South Region)||3.38 BRL/kg liveweight||75.13¢|
|Russia||70 RUB/kg liveweight||$1.03|
|China||14 RMB/kg liveweight||$1.02|
|Spain||1.303 EUR/kg liveweight||77.17¢|
|Vietnam||39,000 VND/kg liveweight||85.01¢|
|South Korea||4,500 KRW/kg liveweight||$1.92|
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