A Long-Term Loss of Hog Farming Dragged Down Feed Consumption, so Operating Profits of Feed in 2018 Possibly Would Go Do

By CnAgri2018-06-13 14:36:12 Print In early June, feed companies started to cut down the prices for the third time this year in order to promote sales, with the decline of around RMB 50/MT. On the one hand, due to a long-term loss of hog farming and a reduction in stocks, the demand for hog feed went down obviously, and May saw a month-on-month decline of nearly 20%; on the other hand, owing to a great drop in prices of feed materials such as corn and soybean meal, feed prices dropped.
 
Although the demand for feed in June would rebound, yet, judging form the overall situation in the first half of 2018, most of feed companies witnessed a fall in hog feed sales, and the profits went down and even in a deficit. Due to serious homogenization of feed products, the companies compete mainly by cutting down their prices; the degree of concentration of hog farming keeps increasing, which make feed competitiveness more fierce. 
 
Seen from supply and demand of corn and soybean meal: along with auctioned corn being availability on the market, although the proportion of corn produced in 2015 is on the increase obviously, yet due to a weak demand and increasing pressure of sorghum imports, corn prices would maintain at a low level; however, under the situations of soybean meal arrival at the ports in large quantities and a high operating rate, the stocks maintain a level of more 1.1 million MT, curbing the growth of prices.
 
So, feed companies would have a hard time most of 2018, and they would witness a drop in operating profits and even a loss.