New Covid outbreak linked to food imports; Feed companies raise prices

Jilin city links new Covid outbreak to imported food, lockdown risk resurfaces

Jilin City announced that 10 new Covid cases are all linked to employees of Jilin Shuangling Food Trading Co., Ltd, a company which processes imported cold chain food.

This is now the third case in less than two months where cities have reported new outbreaks linked to imported cold chain products. Weihai, Shandong reported an outbreak in early June and Tianjin reported an outbreak in mid-May.

In just the past week, China customs suspended another 19 foreign companies, cold chain facilities, and fishing vessels from exporting to China due to coronavirus detected on packaging.

As cases continue to emerge, Jilin city is said to be on the brink of lockdown again after having already been put under lockdown for nearly two months earlier this year.

Feed companies raise prices as hog market rallies

Hog feed prices continued to rise in June according to a recent article by Futures Daily. Feed mills have hiked prices from 50-150 yuan/ton (7-22 USD/ton) amid high input costs.

While Dalian corn futures have been weaker in June, down 1% since the start of the month, cash prices have held up better. Soybean futures have also been slightly weaker, down 2.4% since the beginning of the month.

New crop wheat prices have also remained high. In the past week, Hubei province said average prices for wheat had risen 15 yuan/ton to reach an average of 3,093 yuan/ton ($455 USD/ton).

In the past quarter, cash hog prices have seen a substantial rally, rising 43% to 16.80 yuan/kg amid herd reductions and government stockpiling efforts. As prices have risen, farmers have become more bullish with some now looking to increase herds.

In a recent investor call, Muyuan, the largest publicly traded hog breeder in China, said they thought hog prices could hit 18 or even 20 yuan/kg in the second half of the year. Muyuan also said the rise in feed prices since the beginning of 2021 has raised its breeding cost by 1.5-1.8 yuan/kg. Now that cash hog prices have risen and farmers are more optimistic about the market, feed companies feel able to raise prices and pass on more of the price increase to farmers.