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.

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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  • 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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