"This year's feed materials are too 'crazy'." Zhao Qingyuan (a pseudonym), head of a medium-sized feed enterprise in Guangdong, sighed. After years of deep cultivation in the feed industry, he has also experienced the price fluctuation of feed raw materials such as soybean meal and corn. However, it is "a long time to see" that the feed price has been raised at least three times due to the sharp rise in the price of raw materials in a short time less than three months after the beginning of the year.
Since this year, China's feed industry has made three general price adjustments, with a cumulative increase of 200 yuan per ton. All feed enterprises will choose to follow. However, this still cannot offset the cost increase of 350 ~ 400 yuan per ton. Therefore, since late March, some feed enterprises have raised the ex factory price of feed again, with an increase of 80 ~ 100 yuan per ton.
The reason why there is no general increase, Zhao Qingyuan explained that this is mainly because the feed industry takes into account the deep losses of the current downstream breeding industry. If the feed price continues to rise, it is likely to cause the breeding enterprises to be unable to support and choose to exit, which will eventually affect the later demand of the feed factory. However, this choice can only be temporary. At present, the production of feed has already lost money. If soybean meal and corn rise again, feed enterprises can't bear it.
The soaring price of feed raw materials will also bring a series of chain reactions, including that if the current price of soybean meal continues to be maintained, its demand will be significantly reduced, and the import demand of soybean is bound to decline further this year; Feed prices soared, livestock and poultry meat prices fell, and the scale of the breeding industry is bound to shrink.
raw material prices rise one after another
In feed, soybean meal and corn are the main components, and soybean meal accounts for more than 60% of feed protein. The price changes of them directly determine the profits of feed enterprises.
Zhao Qingyuan said that in December 2021, the price per ton of soybean meal arrived at the factory was only 3300 yuan, up to 3800 yuan. If other expenses are appropriately reduced, the enterprise can still ensure a little profit. However, in 2022, soybean meal futures and spot prices hit record highs for many times. At present, the main contract price of soybean meal futures has reached about 4200 yuan per ton, an increase of 1000 yuan per ton compared with the beginning of this year, or more than 30%; In the spot market, the price of soybean meal per ton reached about 5000 yuan, an increase of more than 50% compared with the beginning of the year.
As of March 30, the spot price of soybean meal in Guangdong was 4900 yuan per ton, 5000 yuan per ton in China and 5050 yuan per ton in Henan. The price of corn is 2780 yuan per ton in Liaoning and 2890 yuan per ton in Guangdong. There is still a small loss in transportation from the production area of Liaoning to the sales area of Guangdong.
As Zhao Qingyuan's company mainly produces meat and poultry feed and pig feed, the former needs to add 19% soybean meal and the latter needs to add 20%. According to its accounting, only the price rise of soybean meal will increase the feed cost per ton by 350 yuan.
At the end of February 2022, the international situation was turbulent. The price of corn, which has been relatively stable for more than one month, also began to rise, with an increase of 50 ~ 80 yuan per ton. As an alternative crop to corn, barley and sorghum also increased by 80 ~ 100 yuan per ton.
The ex factory price of feed has been raised for three consecutive times. When Zhao Qingyuan's company was in February, the product sales volume had not been greatly impacted, but the gross profit had decreased rapidly. In March, while product sales fell, the company began to lose money.
The reason for the decline in sales volume, Zhao Qingyuan said, is mainly that farmers have given up on their own initiative and no longer sell feed on credit in view of the high pressure of cash flow. Of course, the life of feed enterprises is difficult, "how many feed factories can bear a loss of one or two hundred yuan per ton for a long time?"
Under the rising cost, some enterprises even produce adulterated feed. On March 21, the market supervision bureau of Ziyang City, Sichuan Province announced that the typical case investigated in the law enforcement action of "Chunlei action 2022" involved a feed processing company producing feed without standard.
On March 23, Hubei feed industry association also issued a proposal, calling on the industry to put an end to fake and shoddy products and ensure product quality. It is strictly prohibited to cut corners on production, reduce or do not use high-quality protein feed and feed additives at will. It is strictly prohibited to shoddy, confuse fake with real, and disturb the market order.
behind the soaring price of raw materials
The soaring price of feed raw materials is caused by multiple factors, including historical factors and factors outside China.
Shen Yang, a researcher of brick consulting, told China business news that from the demand side, the pig production capacity has been at a high level after continuous recovery from 2020 to 2021; Although poultry has entered the stage of slow de production from 2021, the production capacity is still high.
From the supply side, after continuous destocking from 2016 to 2020, the corn inventory has been tight. Even if a large number of corn, barley and sorghum are imported in 2021 and replaced by a large number of wheat, it is only stable and the corn inventory will not decline further. On the whole, corn inventory is still at a low level in recent 10 years.
Zhang Zhixian, vice president of China Grain network Yida Research Institute, told the first financial reporter that the rise in the price of soybean meal in China is related to the tightening of soybean supply in the international market from the perspective of external factors.
He explained that soybean meal is pressed from soybean raw materials. Although soybean meal is basically pressed and produced in China, and the proportion of direct import is very small, more than 90% of soybeans need to be imported from abroad, and even a large proportion of pressed rapeseed need to be imported. More than 60% of China's soybeans are imported from Brazil and Argentina. However, since October last year, due to the drought caused by La Nina phenomenon, soybean production capacity in South American countries is generally expected to decline.
Shen Yang mentioned that Brazil's expected soybean production reduction, coupled with the strong appreciation of China's currency, and Brazil's farmers' insufficient willingness to sell soybeans in the early stage, led to the arrival of only about 5 million tons of Chinese soybeans in February, aggravating the pressure on China's soybean meal supply.
In addition, as Russia and Ukraine are major agricultural exporters, grain exports in the Black Sea region are blocked, while more than 20% of China's corn and barley imports come from Ukraine. The market is worried that imports will be affected. The turbulence of the international situation has led to the rise of bulk Shenzhen Agricultural Products Group Co.Ltd(000061) prices, and many countries have introduced policies to restrict grain exports. At the same time, in April, spring sowing in the northern hemisphere and summer sowing in the southern hemisphere will be carried out successively. Russia and Belarus, as major fertilizer exporters in the world, have a bad export of chemical fertilizer, and the global price of chemical fertilizer has soared, which has triggered global concerns about grain output in the new year and supported the maintenance of high global grain prices.
At present, although feed enterprises can conduct downward by increasing the ex factory price of feed, the increase is less than the increase of feed cost. For them, the pressure is not great.
Shen Yang said that although the pressure on the feed factory is great, it only loses gross profit or depreciation of some fixed assets. If the sales of feed can be recovered normally, its cash flow has not been affected. However, the downstream aquaculture industry continues to suffer losses. While the demand decreases, the credit situation of feed funds continues to increase, which aggravates the operation difficulty of feed enterprises and causes losses in the industry.
At present, although some enterprises are "lying flat", some enterprises are actively looking for low-cost raw materials. According to the feedback of Guangdong traders, since the end of February this year, a number of feed enterprises and traders in Guangdong Province have increased the import of dry cassava to replace corn. At the end of February, imported dry cassava was 500 ~ 600 yuan lower than corn per ton, and it was still 400 ~ 450 yuan lower than corn per ton in March.
chain reaction under the strong price of raw materials
The strong price of feed raw materials will also bring a series of reactions.
For example, if soybean meal continues to maintain the current price, the demand for soybean meal will decrease significantly, and the demand for soybean import is bound to decline further in 2022. This will directly lead to a decline in China's soybean oil production. In addition, as an alternative to soybean meal, the import of miscellaneous grains such as dry cassava is expected to increase.
Moreover, as the feed cost accounts for 70% of the pig breeding cost, the fluctuation of feed price has a great impact on the actual income of farmers.
Shen Yang said that for some breeding enterprises, they have their own feed processing business. In the face of the pressure of a significant increase in feed costs, these enterprises or farmers take the bottom line of not starving pigs and adopt the feeding mode of "70-80% full"; Or under the condition of ensuring that the basic feed indexes are met, adjust the feed formula, reduce the crude protein content in the feed, and supplement it with cheap raw materials such as wheat bran, rice bran and fruit residue, so as to reduce the breeding cost.
Considering the soaring price of feed, the decline of the price of livestock and poultry meat, and the scale of the breeding industry is bound to shrink, according to the analysis of industry insiders, a wave of panic selling of livestock and poultry is expected in April. The direct inducement is "no money to buy feed, no credit, no credit".
Shen Yang said that only after phased capacity reduction can livestock and poultry prices rebound in stages, but whether the cycle can be reversed remains to be seen.
In addition, after the outbreak of African swine fever in 2018, the kitchen waste feeding mode was banned, resulting in a significant increase in feed demand in China. Industry insiders believe that if the kitchen waste can be collected and then sterilized at high temperature for feed, it can also reduce the demand for feed grains in China.
In view of the high dependence of feed grain on foreign countries, China has also successively issued relevant documents.
The work plan for reduction and substitution of corn and soybean meal in feed issued in March 2021 requires "reducing the proportion of corn and soybean meal in feed", which aims to "adapt to the new situation of tight supply and demand of bulk feed raw materials, improve the utilization efficiency of raw materials, build a new dietary formula structure based on national conditions, accelerate the reduction and substitution of corn and soybean meal, and promote the stable supply of feed grain".
In December 2021, the Ministry of agriculture and rural areas issued the national development plan for animal husbandry and veterinary industry in the 14th five year plan, which once again defined "promoting precise ingredients and materials, and promoting the reduction and substitution of corn and soybean meal". At the same time, it is also proposed to "build a modern forage industry system", implement the transformation of grain to feed according to local conditions, increase the planting of whole plant silage corn, improve the self-sufficiency rate of Forages in short supply such as alfalfa and oat grass, develop and utilize new forage resources, and promote the efficient utilization of non grain forage resources.
