China F&A Monthly January 2021
China’s economy will likely show a strong rebound this year, with its annual GDP predicted to grow 7%. The ongoing recovery and changes expected in 2021 for China’s F&A sector are largely due to a recovery of economic growth/spending power from the pandemic, evolving US-China political relations, a confidence boost from the EU-China investment agreement (CAI), and recovery from African swine fever followed by continuous expansion.
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The government’s recent ‘dual circulation’ strategy will also guide future industrial development, including that of F&A industries, emphasizing localization, self-sufficiency, and diversification of globalization. Technological developments are likely to be an area of focus.
The main highlights for January include:
- Fertilizer and agrochemical prices are expected to increase, driven by growing demand and higher production costs. Meanwhile, production costs will remain high, supported by rising raw material prices.
- Chinese corn prices are expected to stay at high levels in 2021, and soymeal prices will be supported by strong feed demand.
- Chinese pork prices remain high despite the release of state reserves, and poultry prices are supported by seasonal demand but are under downward pressure for the rest of Q1.
- Milk prices are closing in on historical highs, along with rising feed prices.
- The beverage sector is estimated to record healthy growth in 2021, with local brands outperforming international brands in certain categories.
- Foodservice will continue its slow recovery in 2021, returning to 95% of pre-pandemic 2019 levels. Food retail remains resilient, with a steepening shift to online grocery in 2021.
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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