China F&A Monthly July 2020
China’s food-related consumption has gradually been recovering, driving a rebound or stabilization in the prices of midstream agricultural products. Very stringent measures were taken in Beijing, as soon as the early signs of a resurgence of new local Covid-19 cases were identified, quickly bringing the situation under control. Things on the geo-political front have become more complicated, with border disputes with India and rising tensions between China and the US. This brings uncertainties for China’s international trade, with China being one of the largest importers of food and agricultural products.
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The main highlights for July include:
Demand and prices for domestic fertilizer and agrochemicals remain weak. Export markets are also under great pressure, leading to low agricultural and industrial demand. Chinese feed consumption is projected to recover faster, boosting the use of corn and soymeal in feed ration. China intends to purchase more US agricultural products to fulfil the demand, although that will depend on US-China trade relations. Hog prices have rebounded mildly; and while domestic production remains low, the government is releasing state reserves of frozen pork to curb market prices. Poultry prices are expected to stabilize and supply has improved greatly. The recovery in dairy processing volume started to support milk prices. Consumer demand for dietary supplements in China showed signs of recovery this year. From January to May, food-only retail sales continued to outperform other categories in overall retailing sales.
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