Industry Trends | High raw material cost and sluggish downstream sales. It is also difficult for feed enterprises to raise prices to solve the "pressure at both ends"
After the Spring Festival, due to the rising prices of raw materials such as soybean meal and corn, feed prices have risen frequently, but feed processing enterprises have had a hard time and are facing "pressure from both upstream and downstream".
Although the feed industry is a cost plus model, the increase in feed prices is not consistent with that of raw materials. In addition, in terms of demand, the current breeding industry is in a downturn, and the sales volume of feed declines year on year, so the current income cannot cover the fixed costs of feed plants.
The increase of feed can not keep up with the increase of raw materials
After the Spring Festival, many feed enterprises set off a wave of price increases.
Yichang Zhengbang Feed Co., Ltd. under Zhengbang Technology (002157. SZ) announced that the price of concentrated feed products would be increased by 200 yuan/ton from 0:00 on February 25; Since February 28, North China District of Tiankang Biological (002100. SZ) Feed Business Department has raised pig concentrate by 100 yuan/ton; Xiangyang New Hope Liuhe Feed Co., Ltd., a subsidiary of New Hope (000876. SZ), has raised the price of layer concentrate by 200 yuan/ton since February 26.
It is reported that the feed industry mostly uses cost plus as the pricing model, and the fluctuation of raw material price will inevitably affect the feed price. The feed processing industry is an intermediate industry between the breeding industry and the planting industry. The feed price pricing should not only consider the cost control of raw materials, but also consider the demand of downstream customers. The feed price will also rise when the demand is strong. This year, the feed price will rise more because of the rising cost of raw materials, of which corn has a small increase, while soybean meal has a large increase, which is mainly affected by the current international situation and the marginal politics of Russia and Ukraine.
The aquaculture industry continues to lose money. Feed enterprises are under pressure at both ends
In addition to the price increase, it also transfers the rising pressure of raw materials. Large feed enterprises also reduce their own costs through management. On the interactive platform, Haida Group (002311. SZ) said that the company hedged the impact of rising raw materials by giving play to the scale effect and improving operational efficiency. New Hope also said in its recent research activities: "Although the feed price is expected to remain high in the first half of 2022, we believe that the decline of feed cost still comes from the management of the production process."
In terms of poultry, according to the statistics of Mysteel's agricultural products, as of February 24, 2022, the average breeding profit of large meat chicken was 0.73 yuan per chicken, and the loss began on February 18. After the festival, the price of woolen chickens fell to the bottom, the feed cost continued to rise, and the breeding suffered losses. If individual investors purchased feed by themselves, they strictly controlled various costs, and the feed ratio was controlled below 1.45, or slightly profitable. The average breeding profit of 817 white chickens was 0.96 yuan per chicken. After February 14, the profit space was compressed, falling below 1.00 yuan per chicken. In the aspect of live pigs, since last year, the pig price has continued to show a downward trend, and the farms have continued to be in a loss situation, and the loss value has continued to increase. The pig price has continued to decline, and the profit value of the farms has shrunk. At the same time, the feed cost has continued to rise, and the double pressure is great, and the farms are unable to change the loss situation. At present, the breeding loss continues to increase, and the loss value of self breeding is higher than that of piglet fattening.