Beef prices remain firm in spite of weaker demand
Wholesale beef prices in China have remained relatively steady at high levels despite weaker demand. Average wholesale prices for live cattle are at 37 yuan/kg, up marginally from 36 yuan/kg at this time last year. Carcass prices are at 67 yuan/kg, flat over the past year.
Costs for raising cattle remain relatively high including high silage costs, as evidenced by the recent controversy surrounding wheat farmers harvesting crops early for use as silage rather than letting the crops mature.
Prices remain high despite consumption falling recently. Wholesale markets have noted a decline in beef consumption in restaurants and an overall decline in market demand. Additionally, cross-province transportation of beef faces challenges due to covid-related logistics disruptions.
Large hog breeder notes weaker pork demand amid Covid
Wen’s Foodstuff, one of the largest publicly traded hog breeders in China, recently announced that their cost of production was less than 18 yuan/kg in March, and they aimed to lower their cost of production to 16-17 yuan/kg on average for 2022.
Hog prices have rallied recently, but cash prices still remain below this with the national average currently at 15.6 yuan/kg, generating a negative margin for hog breeders.
The company also announced a sales target of 18 million hogs in 2022. In comparison, their 2021 sales were 13.2 million hogs.
The company’ chairman recently did an interview with state media CCTV’s finance channel about the state of their business.
In the interview, he noted that they raised 9.3 billion yuan in convertible notes last year, but also is confident that they can tap additional funding from banks through the downcycle in the hog market.
In the interview he also mentioned the weakening demand picture, noting that “affected by the epidemic, the consumer side is very weak, and now there is still a certain downward trend in consumption, and the supply is still exceeding demand for the time being.”
The company expects the current downcycle in the market to reverse and improve in the third quarter but noted that prices might not recover until the fourth quarter under a pessimistic scenario.
Animal & feed prices update