Bird flu, weak pork prices extend corn glut
2014-March-4 Source: Szdaily web edition
Text Size: A A A | Print | Share by E-mail:

A fresh outbreak of bird flu and tumbling pork prices are undermining China’s demand for animal feed, adding to a glut of corn and potentially prolonging a dispute over GMO material that has curbed U.S. imports.

A crackdown by China on an unapproved strain of genetically modified corn detected in some U.S. shipments has led to the rejection of up to 1 million tons and weighed on prices.

A new bird flu outbreak in southern Guangdong Province in January forced chicken farms to scale back on restocking, following huge losses last year after the culling of millions of birds.

“Broilers, ducks and egg layers, these three businesses have continually lost money in the past year. It hasn’t recovered and it is getting worse,” said Jin Weidong, chairman of Wellhope Agri-Tech Co. Ltd., one of China’s top 10 feed companies.

“We’re not so optimistic about this year. It will be very difficult to grow volumes; it will be a very challenging year.”

Animal feed makes up about 60 percent of China’s corn usage, and half of that is for poultry feed, output of which fell 8 percent in 2013. Overall corn use fell to 186 million tons, the first decline in four years.

The agriculture ministry has said outbreaks of bird flu have caused 20 billion yuan (US$3.3 billion) in losses to poultry breeders so far this year, compared with 60 billion yuan of losses in the first half of last year.

“The situation is definitely worse than last year. Many chicken farms are having cash-flow problems. Restocking is very bad,” said Wang Xiaoyue, an analyst at Beijing Orient Agri-business Consultant Co. Ltd.

At the same time, falling pork prices are pushing many small household pig breeders — also major consumers of animal feed — out of business.

China’s hog stocks hit a 10-month low in January, said the China National Grain and Oils Information Center.

China has begun to stockpile local pork after prices fell to an eight-month low, but analysts say the amount being stockpiled is too small to lift prices.

“Demand from pig breeding may be weakening in coming months if farmers begin a large-scale cull of breeding sows because of negative margins,” said an industry analyst.

For the 2013/14 crop year, China’s corn demand may grow only moderately or hold flat, said an analyst with an official think tank, who declined to be identified. He pointed not just to the impact of bird flu but also a sluggish processing industry, which makes products such as corn starch, alcohol and corn syrup.

Weak domestic demand has led farmers to sell more of their corn to the government, which is expected to add more than 50 million tons to existing stockpiles by the end of April from 2013’s record 217.7 million ton harvest.

Along with 30 million tons already in storage, the government’s total stocks would be more than the combined output of the European Union, accounting for 43 percent of annual domestic consumption.

“The government is facing huge pressure to deal with these large stocks, which can take a year, or even two to three years, for the market to digest,” said the analyst with the think tank.

Chinese buyers flocked last year to fill the country’s quota for low-tariff imports of cheap U.S. corn following a bumper harvest, sparking forecasts of higher imports in 2014. But the official rejection of 887,000 tons of U.S. corn since November last year after the discovery of Syngenta AG’s MIR-162 strain — not yet approved in China — led to other shipments being cancelled or diverted as exporters scrambled to avoid having cargoes caught up by the row. The total volume rejected to date may have reached a million tons, industry sources said.

Editor: Olivia
Related News
This site contains material from other media for content enrichment purpose only. The website do not endorse such content and do not bear the joint responsibility of their copyright infringement. The views expressed in written material posted to the bulletin boards of are those of the authors and/or publishers. The website does not endorse information products posted by organizations and individuals here. The originators of these information products are solely responsible for their content. For copyright infringement issues, you shall contact within thirty (30) days. Email:
Info for Non-Residents