China F&A Monthly February 2021
In our latest China F&A Monthly: Farmers are purchasing more farm inputs, G&O prices remain high while pork prices soften… and how can food & beverages recover again?
The main highlights for February include:
• Farm Inputs. Rising agri commodity prices help to improve farmers’ purchase intention for farm input products. Demand for fertilizers and agrichemicals is expected to increase during the spring ploughing, which will further drive up prices. Utilization efficiency of fertilizer and agrochemicals in key field crops reached 40.2% and 40.6%, respectively, in 2020. The government aims to increase these utilization rates by 3% by 2025. Value-added products will be the mainstream in the future.
• Grains & Oilseeds. Supported by positive fundamentals, Chinese G&O and vegetable oil prices will remain at a high level throughout 2021. However, the risk of overpricing – due to excessive speculation – has also grown. Assuming no weather disruptions, a price rise is expected to ease in the coming months.
• Animal Protein. Chinese pork prices softened under mixed factors, including more supply from government reserves and weaker demand during the festival season – the result of a new wave of Covid-19. Poultry prices are under downward pressure, with incidents related to the poultry supply chain and H5N8 outbreaks.
• Dairy. Seasonal dairy production ahead of the Chinese New Year is now behind us. Milk prices are almost at an historical high, although signs of peaking have emerged – however, it may be too early to call this a cyclical downturn just yet. Supply chain disruptions still loom, as inbound cargoes are required to be screened for Covid-19, causing delays in customs clearance.
• Beverages. Beverage companies are struggling to improve profitability and enhance the reputation of their brands by optimizing their product mix and implementing sustainability initiatives.
• Consumer Foods. Foodservice demand will remain weak, due to tightened spending. Food retail: Convenience foods will continue to see strong seasonal demand.
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Where to go from here
Ping ChewHead of RaboResearch Food & Agribusiness - Asia Read more
Sandy ChenSenior Analyst - Dairy
Chenjun PanSenior Analyst - Animal Protein Read more
Lief ChiangAnalyst - Grains & Oilseeds
Jingyan SunAnalyst - Farm Inputs
Stacie WanAnalyst – Supply Chains and Beverages
Michelle HuangAnalyst – Consumer Foods Read more