Poultry breeding stocks; minimum rice prices raised; futures cap

Poultry breeding stock prices continue to soar

Prices of chicks have risen by nearly 50% in the past month, continuing a massive rise in the past several months.

At the beginning of February, average prices had already risen 120% in a month, reaching 4.4 yuan per bird. Prices have now reached 6.6 yuan per bird.

Yisheng, one of the largest producers of broiler chicks, announced that its sales book was filled through the end of May due to extremely high demand.

Prices for parent generation breeding stock also continue to rise, up 59% since November.

China’s 2022 poultry meat production was 24.43 million tons. The country imported 1.3 million tons last year, with Brazil remaining the largest supplier, accounting for 43% of imports.

The domestic poultry industry has seen weaker breeding stock supplies due to the three-year disruption of international flights due to Covid as well as avian flu outbreaks in other countries.

Government minimum prices for rice raised

The National Development and Reform Commission announced it would be increasing the minimum rice price for reserve purchases.

Early rice saw its minimum price raised by 40 yuan per ton to 2560 yuan per ton. This is the fourth consecutive year of increases in the minimum price.

Middle and late season rice saw prices remain stable at 2580 yuan per ton and 2620 yuan per ton, respectively.

The minimum prices are a floor price at which the government will purchase the grains. Currently, early rice in Hubei is 2672 yuan per ton, and middle and late season rice are around 2700 yuan per ton, so farmers will sell to the market rather than to reserve stockpilers.

The 2023 minimum reserve price for wheat was announced last September at 2340 yuan per ton, up 40 yuan per ton compared to 2022.

Futures Recap

Futures were relatively quiet on Tuesday. The meal complex saw some buying offset against minor losses in edible oils.

Corn was up due to short covering after reaching the bottom of its trading range and daily volume and open interest fell.