November 1, 2024

 

A glut of beef and milk is pulling down China's ruminant feed production

 

In the first half of 2024, China's overall ruminant feed production was 69.43 million tonnes, a 7.98% drop from the same period of 2023.

 

The production of ruminant feeds has been low since February. In past years, ruminant feed production had been stable or started to increase in the May-June period. But, this year, it shrank from the February-April period, a crucial factor resulting in the sharp decline in production in H1 2024.

 

The main reason for this situation is poor feed demand from the ruminant industry in China. This has to do with the oversupply of high-yielding dairy cows in China.

 

With the number of such cows reaching a new high, China's total milk output in 2023 was 42.81 million tonnes. But, with Chinese dairy consumption dominated by liquid milk, this local diet habit, coupled with the country's sluggish economy, led to a severe surplus of milk. Linked to the predicament are high prices that hindered the growth of dairy consumption.

 

In the last few months, many dairy companies publicly called for cooperative farms to cut their cow inventories and mitigate a milk oversupply. These farms proceeded to cull their dairy cows, sparking a consequential reduction in dairy cattle feed consumption and production.

 

Meanwhile, as farms release excessive dairy cows to be slaughtered for beef, supplies surged in the beef cattle market, which is already dealing with a glut. The number of beef cattle in China has increased rapidly for several years, reaching its peak in 2023. In addition to a bloated beef cattle supply, China's high beef imports and the contribution of culled dairy cows dragged down beef prices, forcing inventory cuts amid mounting losses.

 

The downsizing of production capacity across all sectors of the Chinese ruminant industry is expected to continue. As China's economy remains weak and the demand for ruminant products is likely to shrink further, the oversupply of milk and beef will become more acute in the second half of 2024. Ruminant feed producers will be under greater pressure in this period and 2025.

 

- Shi Tao, eFeedLink