1 Monitoring of Feed Materials and Additives Prices 1

1.1 Corn Prices Averaged RMB 1,910/MT, a Week-on-Week Increase of 0.5% 1

1.2 DDGS Prices Recorded RMB 1,934/MT, a Week-on-Week Increase of 0.2% 1

1.3 Soybean Meal and Cottonseed Meal Prices Kept Stable, Rapeseed Meal Prices Dropped Slightly 1

1.4 Fish Meal Prices Went Down 1

1.5 Lysine and Methionine Prices both Kept Stable 1

1.6 Vitamin Prices Went Down, Dicalcium Phosphate Prices Kept Dropping 1

1.7 Compound Feed Prices Dropped Slightly, Costs Increased, and Margin Shrank 1

2 Market Analysis 1

2.1 The Resumption of Export Rebates of Corn Further Processed Products Would Speed up the Process of Re-stocking 1

2.2 An increase in Exports of Further Processed Products Depends on Whether Domestic Corn Market Price Integrates with the World Market 1

2.3 Industrial Feed Output in July 2016 Decreased by 4% Month on Month and Was the Same as Last Year 1

3 Analysis on Import and Export of Feedstuff in July 1

3.1 Corn 1

3.1.1 29,000 tons Corn Imported in July, down 38,000 tons from Last Month 1

3.1.2 Corn Importation Price at 268 US$/ton, up 55 US dollar/ton from Last Month 1

3.1.3 86.6% of Import Corn from Myanmar, US and Ukraine in July 1

3.2 DDGS 1

3.2.1 377,700 tons DDGS Imported in July, up 142,100 tons from Last Month 1

3.2.2 DDGS Importation Price at 221 US$/ton, up 18 US$/ton from Last Month 1

3.1.3 99.9% of the Import DDGS from US in July 1

3.3 Soybean Meal 1

3.3.1 197,200 tons Soymeal Exported in July, down 20,300 tons from Last Month 1

3.2.2 Soymeal Exportation Price at 407 US$/ton, down 12 US$/ton from Last Month 1

3.3.3 59.4% of Export Soymeal to Japan in July 1

3.4 Fish Meal 1

3.4.1 83,500 tons Fish Meal Imported in July, down 21,200 tons from Last Month 1

3.4.2 Fish Meal Importation Price at 1,470 US$/ton, up 21 US$/ton from Last Month 1

3.4.3 44.4% of Import Fish Meal from Vietnam, Thailand and Peru in July 1

3.5 Lysine 1

3.5.1 29,500 tons Lysine Exported in July, up 1,500 tons from Last Month 1

3.5.2 Lysine Export price at 1,149 US$/ton in July, up 46 US$/ton from Last Month 1

3.5.3 51.4% of Lysine Exported to Top 5 Countries of Destination in July 1

3.6 Methionine 1

3.6.1 17,100 tons Met Imported in July, up 1,200 tons from Last Month 1

3.6.2 Met Importation Price at 3,088 US$/ton, down 25 US$/ton from Last Month 1

3.6.3 70.7% of Import Met from Singapore, France and Belgium in July 1

4 Market News 1

4.1 COFCO Would Take Full Control of Nidera 1

4.2 Gushi Animal Agriculture Group was Listed on the New Three Board on 15th August 1

4.3 Tangrenshen Would Acquire a 51% Stake in PREMIERINVE 1

4.4 Haid Group’s Operating Revenues and Net Profits in the First Half of 2016 Were RMB 11.62 Billion and RMB 385 Million, up 20.41% and 33.54% Year on Year 1

4.5 Wellhope Agri-tech’s Operating Revenues and Net Profits in the First Half of 2016 Were RMB 5.052 Bilion and RMB 185 Million, up 18.09% and 55.99% Year on Year 1

Attached Tables 1

Attached Table1, China’s Corn Price in Main Areas 1

Attached Table2, China’s DDGS Price in Main Areas 1

Attached Table3, China’s Soybean Meal Price in Main Areas 1

Attached Table4, China’s Rapseed Meal Price in Main Areas 1

Attached Table5, China’s Cottonseed Meal Price in Main Areas 1

Attached Table6, China’s Fish Meal Price in Main Areas 1

Attached Table7, China’s Lysine Price in Main Areas 1

Attached Table8, China’s Methionine Price in Main Areas 1

Attached Table 9, China’s Calcium bicarbonate Price in Main Areas 1

Attached Table 10, China Corn Imports by Original Country, Jul, 2016 1

Attached Table 11, China Soymeal Exports by Country of Destination, July, 2016 1

Attached Table 12, China DDGS Imports by Original Country, July, 2016 1

Attached Table 13, China Fishmeal Imports by Original Country, July, 2016 1

Attached Table 14, China Lysine Exports by Country of Destination, July, 2016 1

Attached Table 15, China Methionine Imports by Original Country, July, 2016 1

Attached Figures 1

Attached Figure1, Corn Price, 2013-2016 1

Attached Figure2, DDGS Price, 2013-2016 1

Attached Figure3, Soybean Meal Price, 2013-2016 1

Attached Figure4, Rapseed Meal Price, 2013-2016 1

Attached Figure5, Cottonseed Meal Price, 2013-2016 1

Attached Figure6, Fish Meal Price, 2013-2016 1

Attached Figure7, Lysine Price, 2013-2016 1

Attached Figure8, Methionine Price, 2013-2016 1

Attached Figure9, Vitamins Price, 2013-2016 1

Attached Figure10, Calcium bicarbonate Price, 2013-2016 1

 

Focus: Resumption of Export Rebates for Further Processed Products Won’t Increase Export Volume Obviously      

Recently, the Ministry of Finance has published the policy of export rebates for corn further processed products, which would resume the export rebate rate for corn starch, aginomoto, alcohol, lactic acid, gluconic acid, lysine and some sugar alcohol products to 13% from 1st September 2016. It aims to increase exports by reducing prices and improving competitiveness, which will push up the operating rate of corn further processing companies and increase the use of corn. However, the effects of this policy still have uncertainty.             

 

First, the effects of this policy depend on whether domestic corn market price integrates with the world market. Since 2008, China has started to carry out the policy of temporary purchase and storage, so domestic corn market price is far higher than international market, reducing export competitiveness of China’s further processed corn products. After the resumption of export rebate, the export growth of China’s corn further processed products would basically depend on whether domestic corn price drops to a reasonable level.      

  

Second, judging from practical experience, the effects of similar policies are limited. During the period of June 2009-July 2010 and January-December 2015, China provided the export rebate of 5% and13% to corn further processed products respectively, although it promoted an increase in export volume of corn further processed products in 2010 and 2015, yet the increase in indirect corn exports didn’t exceeded 1 million MT and the growth was limited.  

 

Third, in order to avoid trade frictions, the two most important corn further processed products: citric acid/lysine salt and ester are not included in this policy. The policy of export rebate possibly would have limited influence on promoting the exports of other non-main products.  

 

 

1 Monitoring of Feed Materials and Additives Prices 

1.1 Corn Prices Averaged RMB 1,910/MT, a Week-on-Week Increase of 0.5%

In this week, corn prices averaged RMB 1,910/MT, RMB 8/MT or 0.5% higher than last week. The corn price in the northeast was RMB 1,770/MT, in North China and the Yellow River and Huai River areas, the price reached RMB 1,928/MT, and the price in the consuming regions averaged at RMB 2,000/MT, down RMB 3/MT, up RMB 9/MT and up RMB 9/MT from last week. 

  

Because of a foregone conclusion of high yield and huge stock pressure, corn price still showed a trend of decreasing. However, due to a drop in southern port stocks of corn substitutes and a limited supply, corn prices in the Huang-Huai Region and north China rebounded slightly, as well as in the producing and consuming areas.        

 

1.2 DDGS Prices Recorded RMB 1,934/MT, a Week-on-Week Increase of 0.2%

The prices of main protein feed remained unchanged and DDGS quotations stabilized. 

 

In this week, DDGS prices averaged RMB 1,934/MT, RMB 4/MT or 0.2% higher than last week. 

 

1.3 Soybean Meal and Cottonseed Meal Prices Kept Stable, Rapeseed Meal Prices Dropped Slightly 

Because of the influence of G20 Summit to be held in Hangzhou of Zhejiang on the operating rate of northeastern oil plants and a weak demand from feed mills, soybeanmeal quotations almocst stabilized. In this week, soybean meal prices averaged RMB 3,245/MT, RMB 3/MT or 0.1% lower than last week.   

  

Along with the influence of more rainfall on aquaculture and no obvious increase in demand for rapeseed meal, rapeseed meal price dropped. Rapeseed meal prices averaged RMB 2,567/MT, RMB 49/MT or 1.9% lower than last week.  

 

Due to no more stocks, cottonseed meal price remained unchanged. Cottonseed meal prices recorded RMB 2,875/MT on average, RMB 5/MT lower than last week. 

 

1.4 Fish Meal Prices Went Down 

More rainfall in the south influenced the recovery of aquaculture and the delivery of fishmeal at the ports, so fishmeal price further fell.   

 

In this week, the prices of SD65% fishmeal in the main ports were 11,300 RMB/MT, and the price of SD68% super fishmeal in the main ports averaged at 13,100 RMB/MT, down RMB 400/MT and 300/MT from last week. 

 

1.5 Lysine and Methionine Prices both Kept Stable

Due to relatively low hog stocks, feed mills had a weak demand for lysine, but most lysine producers stopped producing for an overhaul and the supply reduced, so lysine quotations almost stabilized. In this week, 98.5% lysine prices averaged at RMB 9,350/MT, and the price of 70% lysine averaged at RMB 5,300/MT, both stable from last week.  

 

A weak demand for poultry feed influenced the use of Met, but Met producers had controlled the goods purposely and petroleum price also stabilized, which both supported Met quotations. This week, solid Met price stabled. Solid Met price was RMB 27,500/MT, and price of liquid Met recorded at RMB 21,500/MT, both stable from last week.   

1.6 Vitamin Prices Went Down, Dicalcium Phosphate Prices Kept Dropping

Due to a bit weak demand for vitamin from feed mills, some vitamin companies with relativley high stocks decreased their quotations. In this week, domestic vitamin A prices averaged RMB 305/Kg, down RMB 10/Kg from last week, and the price of domestic vitamin E averaged RMB 86.5/Kg, stable from last week.  

  

Along with the weakening of demand from feed mills, calcium bicarbonate prices further decreased. Calcium bicarbonate prices reached RMB 1,720/MT, down RMB 40/MT or 2.3% from last week.   

 

1.7 Compound Feed Prices Dropped Slightly, Costs Increased, and Margin Shrank

In this week, the prices of compound feed for fattening pigs, broiler and layer averaged RMB 3000/MT, 3080/MT and 2,750/MT, stable, down RMB 10/MT and down 10/MT from last week. 

 

Along with no big changes in soybean meal price but an increase in corn price, the feed costs of fattening pigs, broilers and layers stabled at RMB 2,799/MT, 2,924/MT and 2,584/MT respectively; up RMB 7/MT, 6/MT and 6/MT from last week.   

 

The gross margins of compound feeds for growing-finishing pig, broiler and layer were respectively 201 RMB/MT, 156 RMB/MT and 166 RMB/MT, down 7 RMB/MT, 16 RMB/MT and 15 RMB/MT, gross margin rates at 6.7%, 5.1% and 6.0%. 

 

2 Market Analysis 

2.1 The Resumption of Export Rebates of Corn Further Processed Products Would Speed up the Process of Re-stocking  

Although temporarily-stored corn has been sold to the targets and auctioned since late May, yet due to no competitive auction price, poor quality and difficulty on ex-warehouse, the transaction volume was limited. By late August, temporarily-stored corn stocks still had reached 240-250 million MT, far higher than the demand for corn for a year. So de-stocking still has huge pressure.        

 

Recently, the Ministry of Finance has published the policy of export rebates for corn further processed products, which would return the export rebate rate for corn starch, aginomoto, alcohol, lactic acid, gluconic acid, lysine and some sugar alcohol products to 13% from 1st September 2016.          

 

China always is a main exporter of corn further processed products. The policy of export rebate for further processed products aims to increase exports by reducing prices and improving competitiveness, which will push up the operating rate of corn further processing companies and increase the use of corn.  

 

2.2 An increase in Exports of Further Processed Products Depends on Whether Domestic Corn Market Price Integrates with the World Market   

Since 2008, China has started to carry out the policy for temporary purchase and storage, so domestic corn market price is far higher than international market, reducing export competitiveness of China’s further processed corn products. Since 2008, indirect export volume of corn has been maintaining at 3-4 million MT, far lower than the export volume of 6.3 million MT in 2006. After the resumption of export rebate, the export growth of China’s corn further processed products would basically depend on whether domestic corn price integrates with the world market.      

During the period of June 2009-July 2010 and January-December 2015, China provided the export rebate of 5% and13% to corn further processed products respectively, although it promoted an increase in export volume of corn further processed products in 2010 and 2015, yet indirect export volume of corn didn’t exceeded 1 million MT and the growth was limited.    

 

Citric acid and lysine (included salt & ester) are the two most important corn further processed products that are exported. In the last three years, the proportion of indirect export volume of corn from these two products has exceeded 60%. However, China has been the global biggest citric acid and lysine producer and exporter, both accounting for 70% of the global capacity; 70-80% of the output is used for exporting. Due to a high degree of dependence on exporting, China’s citric acid and lysine products (included salt & ester) are frequently suffered anti-dumping investigation by the countries such as the EU and the US. Citric acid and products lysine (included salt & ester) are not included in this policy.     

 

Figure, Indirect Export Volume of Corn Converted from Main Further Processed Products, 2006-2016 

 

Source: China Customs and BOABC database

2.3 Industrial Feed Output in July 2016 Decreased by 4% Month on Month and Was the Same as Last Year  

According to research data from BOABC on some feed mills, industrial feed ouput in July 2016 decreased by 4% month on month and was the same as last year. 

 

Since July, strong rainfall in most southern areas has resulted in serious flood disaster, of which the influence on the middle and lower reaches of Yangtze River was relatively great, especially Hubei, Hunan, Jiangxi and south Anhui. Aquaculture and hog/poultry farming all were influenced. Of which July hog feed output was down 10% month on month. In July, owing to high broiler chick costs and increasing difficulty on farming in summer, the farmers were less willing to replenish; and meanwhile, because of the influence of a drop in intakes of feed on the demand for poultry feed in summer, poultry feed output decreased by 3% month on month. Acquculture in Hubei and Hunan was obviously hit by the disaster, but the demand for acqu feed in south China rebounded normally, neutralizing the influence of a drop in feed output on central China. July aqua feed output increased by 5% month on month, but the decline has been the lowest in recent years. 

 

Industrial feed output of investigated companies in July was alomost the same as last year. Of which hog feed output decreased by 5% year on year; aqua feed output was greatly down 22% year on year. However, poultry feed output increased by 15% on the basis of the lowest last year and ruminant feed output rebounded by 15%, which made up for the influence of a drop in hog and aqua feed output on the total output to some degree.     

Table, Industrial Feed Output and Changes in July of 2016

Industrial Feed Hog Feed Poultry Feed Aqua Feed Ruminate Feed

Month on Month(%) -4% -10% -3% 10% 5%

Year on Year(%) 0% -5% 15% 15% -22%

Source: BOABC database

 

3 Analysis on Import and Export of Feedstuff in July

3.1 Corn

3.1.1 29,000 tons Corn Imported in July, down 38,000 tons from Last Month

In July, 29,000 tons corn was imported, down 56.7% or 38,000 tons from last month, and down 97.4% or 1.08 million tons from last July. 

 

From January to July, China imported 2.93 million tons corn, down 21.9% or 0.82 million tons year on year. 

 

3.1.2 Corn Importation Price at 268 US$/ton, up 55 US dollar/ton from Last Month

The average CIF price was 268 US dollar/ton in July, up 55 US dollar/ton or 25.9% from last month, and up 52 US dollar/ton or 24.2% year on year.

 

The average CIF price of corn was 193 US dollar/ton from January to July, down 16.8% or 39 US dollar/ton year on year. 

 

3.1.3 86.6% of Import Corn from Myanmar, US and Ukraine in July

9,600 tons corn was imported from Myanmar, accounting for 33.3% of the total corn importation in July. The other corn was mainly imported from Russia and Ukraine, accounting for 32.9% and 20.4% of the total corn importation in July, respectively.

 

From January to July, China imported 2.65 million tons of corn from Ukraine, accounting for 90.4%, and China imported 199,800 tons of corn from US, accounting for 6.8%.

 

 

 

 

 

Fig., China Corn Import Volume and Price by Month, 2013~2016

 

Data source: China Customs.

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