Bloomberg News

Bird Flu Brings More Pain for Feed Sellers in China Hurt by Hogs

February 26, 2014

The spread of bird flu in China that’s killed at least 32 people is poised to choke any growth in demand for animal feed as a slump in hog prices encourages livestock owners to cut their herds.

Output of feed, made from corn and soybeans, may be little changed this year from 2013, a survey of four Chinese feed mills and three local analysts by Bloomberg News shows. Production fell last year for the first time in almost a decade as a separate outbreak of the H7N9 virus cut demand, according to the China Feed Industry Association. In the five years through 2012, annual growth exceeded 7 percent, it said.

A continued slump in feed consumption by the world’s biggest soybean buyer would hurt sales for global grain trading companies including Cargill Inc. and food producers such as Tyson Foods (TSN:US) Inc., which owns poultry operations in China. The survey contrasts with predictions from the U.S. Department of Agriculture of an 85 percent gain in corn imports and a 15 percent increase in soybean shipments this year.

“It’s a total disaster,” said Ma Chuang, a partner at animal-husbandry researcher Beijing Boyar Communication Co., referring to the spread of bird flu. “Nobody wants to buy chicks in this environment, and soon even breeder birds may be eliminated.”

Corn on the Chicago Board of Trade has climbed 9.1 percent this year to $4.605 a bushel at 1:50 p.m. Beijing time. Soybean futures climbed 6.9 percent this year and traded at $13.82 a bushel. Soymeal futures on the Dalian Commodity Exchange dropped 2 percent since the start of January and traded at 3,300 yuan ($538) a ton.

Live Poultry

The USDA forecast on Feb. 11 that China’s corn imports in the year through Sept. 30 would jump to 5 million tons, while soybean shipments would rise to 69 million tons.

The country has reported more than 120 cases of H7N9 in humans, Xinhua News Agency said yesterday. Hangzhou city in eastern Zhejiang province announced the closing of several live poultry markets, some permanently, to stem the spread, Shanghai Daily reported Feb. 24, citing the local government. Guangzhou city closed all live poultry markets for two weeks, Xinhua reported Feb. 14.

About 29 percent the chicken consumed in China is eaten directly after being killed, a method preferred by southern Chinese, particularly in Zhejiang and Guangdong provinces, Ma said by phone yesterday. The link between slaughtering birds and infection isn’t clear to all consumers, leading many people to shun all poultry products, he said.

“These outbreaks could be curbed sharply if consumers could be directed to buying pre-slaughtered birds in supermarkets,” Ma said.

Hog Prices

Consumption of feed by broiler chickens last year dropped 8.4 percent to 5.1 million tons, according to data from the feed association. The decline was partly offset by hog feed, which rose 3.6 percent to 80 million tons, data show.

The price of live hogs in China fell to 12.96 yuan per kilogram on Feb. 19, the lowest level since May 2013, according to data from the National Development and Reform Commission. The industry has been unprofitable since January, the data show.

“While we expect a recovery in the pork market in the second half, the next couple of months may be very difficult,” said Alice Xuan, an analyst at Shanghai JC Intelligence Co.

To contact Bloomberg News staff for this story: William Bi in Beijing at

To contact the editor responsible for this story: Brett Miller at

Toyota's Hydrogen Man

Companies Mentioned

  • TSN
    (Tyson Foods Inc)
    • $40.22 USD
    • 0.50
    • 1.24%
Market data is delayed at least 15 minutes.
blog comments powered by Disqus