Upstream raw material supply capacity increased, soybean meal futures prices continued to rise.
Feed industry is an intermediate industry connecting planting industry and breeding industry. Feed raw materials are all kinds of bulk agricultural products, mainly corn, soybean (soybean meal).
In recent two years, with the implementation of the domestic seed law and the promulgation of transgenic safety certificate, the biological breeding industry of corn and soybean has developed rapidly, and the product output has increased steadily.
China’s corn output in 2022 is 277 million tons, up 1.7% year on year. Soybean output reached 20.28 million tons, up 23.7% year on year, and China’s supply capacity for corn and soybeans continued to increase.
Since 2022, with the continuous development and innovation of agricultural technology, China’s supply capacity of corn, soybeans and other agricultural products has been continuously improved, while the import volume of corn and soybeans has decreased somewhat. However, affected by the rising international food prices, the import amount of products has increased significantly.
In 2022, China will import 20.62 million tons of corn, down 27.27% year on year; The value of imports was $7.101 billion, down 11.3 percent year on year; The average corn import price was US $0.34 / kg, up 21.95% from US $0.28 / kg in 2021.
China imported 91.08 million tons of soybeans, down 5.64% year on year. The import amount was $61.236 billion, up 14.38% year on year, and the average import price of soybeans was $0.67 / kg, up 21.21% year on year.
In terms of the prices of major feed raw materials, the global agricultural products trading market in 2022 will be strongly disrupted, with tight supply of corn, soybean meal and other products. From January to December 2022, domestic corn and soybean meal futures prices showed a shock rise. Among them, corn futures price fluctuated from 2630 yuan/ton at the beginning of the year to 2799 yuan/ton at the end of the year, an increase of 6.43%; Soybean meal futures price rose from 3433 yuan/ton to 4573 yuan/ton, an increase of 33.21%.
In terms of soybean meal price, the national soybean meal price in 2022 was high, and reached a record high price twice in the year. In terms of phases, in the first quarter of 2022, influenced by the stocking of feed enterprises during the Spring Festival, soybean meal futures prices continued to rise, and the average futures price in the first quarter was 4050.82 yuan/ton, an increase of 14.79% compared with the same period in 2021. On March 11, it reached the first peak of the year at 4750 yuan/ton, an increase of 38.36% compared with the beginning of the year. In the second quarter, enterprises finished stocking up for the Spring Festival, combined with the outbreak of COVID-19 in many places, which led to the logistics supply blocked and the downstream demand weakened. The average futures price of soybean meal was 4,135.85 yuan/ton, up 2.1% compared with the first quarter, and the overall growth rate slowed down. In the third quarter, the price of soybean was affected by the weather speculation in South America, and the price of soybean meal rose. The average futures price of soybean meal in the third quarter was 4,292.29 yuan/ton, an increase of 3.78% compared with the second quarter. In the fourth quarter, the average futures price of soybean meal was 4,782.58 yuan/ton, an increase of 11.42% compared with the third quarter and 40.39% compared with the same period in 2021, indicating a significant increase in soybean meal price. Among them, from October to November 2022, with the tight soybean supply and soybean meal inventory continued to hit new lows, the domestic soybean meal price all the way stronger. On November 11, the soybean meal futures price was 5068 yuan/ton, an increase of 47.63% compared with the beginning of the year, reaching the second peak in this year.
Corn prices, corn futures prices wide shock rising trend. From January to April 2022, due to the impact of the Russia-Ukraine conflict, food supplies in Ukraine, the world’s main breadbasket, were blocked, leading to a rise in global food prices. At the end of April, the domestic corn futures price reached 2,912 yuan/ton, an increase of 10.72% compared with the beginning of the year. From May to July, corn sowing in the United States accelerated. In order to curb high inflation in the United States, the US dollar entered the path of interest rate hike, which weakened the global commodity trade, and the international corn price fell to the level before the conflict between Russia and Ukraine. In August and September, due to the extreme drought and high temperature weather, the United States, Europe and other producing areas are expected to reduce the grain harvest, the global corn supply gap widened, and the corn market price continued to strengthen. In the fourth quarter, the average futures price of domestic corn was 2,842.17 yuan/ton, an increase of 5.05% compared with the third quarter and 9.05% year-on-year. In December, with the continuous optimization of the epidemic prevention and control policy, the gradual recovery of logistics in various regions, the increasing enthusiasm of multi-parties to purchase corn, and the increase of domestic corn supply, corn futures prices declined.
The scale of the industry continues to expand
China’s feed industry started in the 1970s of last century, and has become the world’s second largest feed producer after the United States since 1991. In recent years, with the continuous improvement of feed production technology, the industry entry threshold is lowered, the number of feed enterprises soared.
Since 2013, the state has strengthened the supervision of the agriculture and animal husbandry industry and conducted investigation and rectification of the feed industry. A large number of feed enterprises have been ordered to rectify and shut down due to environmental substandard and hidden safety problems. Since then, the number of feed enterprises has decreased significantly. In recent years, driven by the “two-carbon” strategy and “industry transformation”, the feed industry has entered the stage of integration and promotion, and the industry has gradually shifted to the stage of high-quality development based on quantity.
Since 2022, China has continued to eliminate backward production capacity. There are 947 large-scale feed manufacturers with an annual output of more than 100,000 tons, 10 fewer than the previous year. There were 13 feed manufacturers with annual output of more than 500,000 tons, 1 less than last year; There are 36 large-scale feed enterprise groups with annual output of more than one million tons in China, 3 less than last year. The scale transformation of the industry is accelerated, and the concentration of enterprises is further improved. With the large-scale transformation of industry accelerating, the output value of our feed industry increases continuously. In 2022, the total output value of the national feed industry was 1316.85 billion yuan, up 7.6% year on year; The operating revenue of the feed industry was 1,261.73 billion yuan, up by 8.0% year on year, and the industry revenue increased steadily.
In recent ten years, the overall feed output of our country has maintained a stable growth trend, and the industry scale has ranked first in the world.
From 2018 to 2022, China’s feed production increased from 228 million tons to 302 million tons, an increase of 74 million tons in five years, with an annual compound growth rate of 5.81%. In 2022, the national output of compound feed was 280.21 million tons, up 3.7% year-on-year, accounting for 92.71% of the total feed production, up 0.64 percentage points compared with the previous year. China’s concentrated feed output was 14.262 million tons, down 8.05% year on year, accounting for 4.72% of the total feed output, down 0.57 percentage points from 2021. The output of additive pre-mixed feed was 6.522 million tons, down 1.64% year on year, accounting for 2.16%, down 0.1 percentage point from 2021.
Overall, feed is mainly compound feed in our country, and the scale of compound feed products has been expanding.
From the output of feed additives, the total output of feed additives in 2022 was 14.6888 million tons, down 0.6% compared with 2021, and the total output of feed additives decreased slightly. The output of single feed additive was 13.687 million tons, up 0.1% year on year, accounting for 93.18% of the total output of feed additive. The output of mixed feed additives was 1.001 million tons, down 8.8 percent year on year, accounting for 6.82 percent of the total output. The output of amino acid additives was 4.492 million tons, up 5.6% year on year; The output of microbial and non-protein nitrogen products kept growing, increasing by 6.7% and 59.1% respectively. The output of vitamin products was 1.50.0 million tons, down 15.4% year on year; The output of mineral elements, enzyme preparations and antioxidants decreased by 0.7%, 12.5% and 14.1%, respectively.
According to the different feeding objects, feed varieties mainly include pig feed, egg feed, meat feed, ruminant feed, aquatic feed and pet feed in our country.
In 2022, China’s output of pig feed, egg feed, meat feed, ruminant feed, aquatic feed and pet feed was 135.975 million tons, 32.109 million tons, 89.254 million tons, 16.168 million tons, 25.257 million tons and 1.237 million tons, respectively. The year-on-year growth rates were 3.98%, -0.63%, 0.18%, 9.22%, 10.15% and 9.47%, accounting for 44.99%, 10.62%, 29.53%, 5.35%, 8.36% and 0.41% of the total output, respectively. In 2022, pig feed and poultry feed account for 85.15%, forming a feed supply pattern dominated by pig feed and poultry feed.
From the regional distribution of feed yield, the feed was mainly concentrated in the eastern coastal areas and Guangxi, Henan, Sichuan, Hubei, Hunan and other areas. Shandong, Guangdong, Guangxi, Liaoning, Henan, Jiangsu, Hebei, Sichuan, Hubei, Hunan, Fujian, Anhui and Jiangxi will have 13 provinces and cities with feed output of more than 10 million tons in 2022. In 2022, the feed output of Shandong reached 44.84 million tons, up 0.2% year on year, accounting for 14.84% of the total feed output of China. The feed output in Guangdong was 35.2724 million tons, down by 1.3% year-on-year, accounting for 11.67% of the total feed output in China. Guangxi’s feed output was 20.2431 million tons, down 0.9% year-on-year, accounting for 6.70%. The top three regions together produced 10,363,500 tons of feed, accounting for 33.21 percent of the total output and nearly one third of the national output.
In terms of growth rate, the feed output in Ningxia, Fujian and Anhui increased faster in 2022, with a growth rate of 14.1%, 13.5% and 12.5% respectively. Shanghai and Beijing saw the largest decline in feed production, down 11.2% and 10.8%, respectively, mainly due to repeated outbreaks of the epidemic, which forced enterprises to suspend production, resulting in a significant decline in feed production.
Downstream market demand is huge, pig stock increased year by year
As the main consumption area of feed, after the epidemic in Africa, the country introduced a series of support and subsidy policies to promote the recovery of pig production capacity.
With the support of relevant policies, the scale of pig breeding in China will continue to expand from 2020 to 2022. In 2022, the number of pigs will reach 453 million and the number of pigs will reach 7.0 million, an increase of 0.70% and 4.30%, respectively. By the end of 2022, 43.9 million sows could be bred nationwide, an increase of 620,000 or 1.4 percent over the previous year.
The increase of breeding sows means the end of overcapacity reduction action, pig breeding has entered a new cycle, pig production capacity will resume to rise, and is expected to drive the increase of pig feed demand. At the same time, with the continuous improvement of residents’ living standards, the per capita consumption of meat has gradually increased. In order to increase meat supply and balance meat consumption, the state encourages poultry, cattle and sheep breeding.
Driven by relevant policies, the scale of poultry, cattle and sheep breeding will continue to expand, which will further boost the feed demand.
