China F&A Monthly March 2021

In our latest China F&A Monthly: Fertilizer and agrochemical prices continue to rise, hog prices will stay strong for the rest of 2021, reduced import competitiveness for dairy, and online channels to see the biggest market share increase of all grocery retail channels this year.

The main highlights for March include:

• Farm Inputs. Fertilizer and agrochemical prices continue to rise amid tight supplies and strong demand, as spring plowing starts. China’s latest “No. 1 central document” proposes to promote the efficient development of high-quality agriculture and to ensure reasonable returns for grain planting, which will greatly improve farmers' enthusiasm for planting and inevitably drive farm inputs sales.

• Grains & Oilseeds. A recent new wave of African swine fever will temporarily impede hog feed use. However, Rabobank considers it a setback during the upward trend of recovery, instead of a turning point. Projected strong feed demand in 2021, up 7% to 8% YOY, will offer price support to protein meals and energy feed grains throughout the year.

• Animal Protein. Chinese hog prices softened due to panic selling under disease concerns, but will stay strong for the rest of 2021. Pork production will grow in 2021, despite the losses of piglet and sow herds in the winter. Poultry prices will be supported by pork supply issues and demand improvement. The breeding herd stays at high levels, supporting strong growth of poultry production in 2021. 

• Dairy. An abrupt surge in the global dairy commodities market has significantly reduced the competitiveness of imported WMP relative to domestic milk, the price of which is at a record high.  Despite a well-stocked market, Chinese buying demand looks heated, likely resulting from a continuing requirement for safety stock amid global supply chain uncertainties.

• Beverages. Soft drinks companies are developing new growth areas via innovation in terms of products, packaging and channels. Western liquors benefited from online surging demand and continued to invest in e-commerce channels.

• Consumer Foods. The 2021 Ox Chinese New Year signals persisting recovery of consumption. Online channels will see the biggest market share increase of all grocery retail channels in 2021.

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  • Ping Chew

    Head of RaboResearch Food & Agribusiness - Asia
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  • Sandy Chen

    Senior Analyst - Dairy
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  • Chenjun Pan

    Senior Analyst - Animal Protein
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  • Lief Chiang

    Analyst - Grains & Oilseeds
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  • Jingyan Sun

    Analyst - Farm Inputs
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  • Stacie Wan

    Analyst – Supply Chains and Beverages
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  • Michelle Huang

    Analyst – Consumer Foods
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