December 2019 / January 2020
It seems China has finally turned the corner with African swine fever (ASF), which has been battering China’s pig herds since mid-2018. China’s breeding sow population rose by 2,2% in December, up from the previous month, while pig stocks at large farms rose by 2,7%. China’s sow herd had declined by nearly 40% by October 2019, but according the Ministry of Agriculture the sow herd has already grown by 7% since September 2019.
December 2019 / January 2020
(average cost and freight to Durban)
China and South East Asia
According to the trade agreement, China will buy an additional USD 32 billion (ZAR 478 billion) worth of agricultural goods over the next two years. That’s USD 16 billion (ZAR 239 billion) more per year than 2017 (pre-ASF) levels of USD 24 billion (ZAR 358 billion). Chinese officials who were involved in the negotiations indicated that China will primarily increase wheat, rice and corn imports to meet the new targets. Other products like pork, beef, poultry and dairy will also be part of the mix. However, some analysts are adamant that grain and oilseed imports will only account for 50–60% of the target and expect that tariffs on other agricultural products will soon be removed in order to facilitate imports. It’s important to note that China’s agricultural imports from the United States were CNY 14,1 billion (ZAR 30 billion) in December, before the agreement was signed. This included 375 000 t of pork and 189 000 t of beef.
Europe and Russia
Middle East and Africa
The Ukrainian pet food producer Kormotech Group will substantially expand its domestic and international operations thanks to a loan of up to EUR 10 million (ZAR 165,6 million) provided by the European Bank for Reconstruction and Development (EBRD). The funds are part of a wider investment programme, which includes the construction of a new production facility in Lithuania and the expansion of the group’s activities in Ukraine. As part of the project, Kormotech will support the expansion of specialised veterinary education across Ukraine to improve the job prospects of young professionals from remote areas. Kormotech Group is one of the top three market players in the Ukrainian pet food market and the first and largest Ukrainian producer of high-quality pet food for cats and dogs. The EBRD is a leading institutional investor in Ukraine and to date has committed more than EUR 14,5 billion (ZAR 240 billion) in over 450 projects to the country. The EBRD’s investments in Lithuania stands at EUR 900 million ZAR 15 trillion) at present.
Chinese lysine prices remained subdued over December and January as most feed producers stocked up before the Lunar New Year celebrations. Most producers closed for the holiday as well. European spot prices are slightly firmer, after three non-Chinese producers halted production to gauge the effect of the novel coronavirus outbreak, which was first reported from Wuhan, China, on 31 December 2019. So far, this has had a minimal impact, since most producers are covered into the second quarter.
Very little to report from the Chinese market. The European market has seen recent price spikes. Raw material deliveries remain a challenge due to the ongoing rail strike in France. A gradual return to production is expected, as the strike is coming to an end, but is by no means guaranteed.
Chinese demand is very low and, with most producers closed, prices are stable. European spot prices have increased due to concerns about shipping delays out of China.
European valine prices increased sharply as a main European producer stopped offering product until the possible disrupting effect of the novel coronavirus is clearer.
Chinese tryptophan prices have increased due to stronger demand before the country’s New Year holiday. Further support came from non-Chinese producers who stopped production in the wake of the novel coronavirus outbreak, seemingly to prepare for possible supply chain interruptions.
This report contains information supplied by and compiled from eFeedLink and Feedinfo.
Detailed reports and references are available on request.