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?

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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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  • 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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