December 29, 2022
China's pig producers tweak feed formulations as soybean supply tightens, prices increase
In the first half of 2022, soybean production in South America decreased substantially while soybean inventories in the United States dropped to low levels, hence supporting CBOT soybean prices.
That led to a significant increase in China's soybean import cost. Since February, the price of soybean meal stood above ¥4,000/tonne (US$550.75). In the second half of March, the price of soybean meal in China surged past ¥5,200/tonne, hitting a new record high.
Six months later, soybean import volumes shrank before China's long October holidays, resulting in dwindling soymeal inventories. Soybean meal prices surged again to more than ¥5,400/tonne (US$743.50) on October 13, exceeding March's record.
In the past two years, as the price of soybean meal soared relentlessly, feed producers' move to cut soybean meal in feed formulations accelerated. However, the use of other meal products to replace soybean meal in pig feeds can affect feed quality.
To support low-protein feed, the Chinese government allowed a high reduction of protein contents in feed. For instance, protein levels at feed factories have dropped from 14% to 12%, while those of large integrated enterprises, like Muyuan, decreased to 8-10%.
From 2015 to 2021, the average consumption of soybean meal for pigs raised in Muyuan was 8.4%; the lowest it could go was 6.6%. Meanwhile, the inclusion rate of soybean meal in Wen's broiler feed has been less than 5%, which is only one-third of the average use in the industry.
At the technical level, many feed plants have the facilities to add crystalline amino acids in low-protein feeds other than the usual ones like lysine, methionine, threonine and tryptophan. But, as the local production of amino acids remained limited, several feed plants maintained higher protein levels of 2% or more.
- Shi Tao, eFeedLink