China F&A Monthly December 2020

China‘s economic recovery remains strong. The PMI hit a new high in November as the Covid-19 outbreak and consumption intention picked up significantly. The strong performance of e-commerce on Singles' Day also boosted spending outlook and confidence. At the same time, the overseas supply and demand gap promoted China’s export growth.

US elections are over but the US-China relationship will remain uneasy. In the future, there will be more competition around trade rules and competitiveness. China has announced national ‘dual circulation’ policies, to enhance state power, increase domestic competitiveness and cope with a more complex international environment. Food security and quality are likely to receive even more attention, with a focus on R&D and capabilities upgrades. There will be an emphasis on diversification of overseas supplies.

The main highlights for December include:

- The ongoing winter reserve promotes downstream demand for fertilizer and agrochemicals and supports prices in remaining strong. In addition, the relatively tight supply also pushes prices up.

- Soybean crushing margin is deteriorating in China, mainly due to the surging CBOT soybean prices. China’s purchase pace of US beans is expected to slow down.

- Hog prices have rebounded recently, reflecting a seasonal strong demand. Pork production is expected to increase strongly in 2021, but the growth pace will be subject to the ASF situation in the current winter.

- Poultry prices have also seen a rebound, but it might be temporary. Prices are under great pressure in the coming months.

- Milk prices have been inching up further, along with strong milk production growth.

- Continued recovery and rebound in the coffee market.

- In October 2020, foodservice sales recorded 0.8% YOY growth rate, the first uptick since the pandemic.

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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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