In the first half of 2012, the feed market experienced a sharp surge in raw material prices. Ingredients such as fishmeal, soybean meal, cottonseed meal, and corn saw rapid price increases, drawing significant attention from the industry. This trend created challenges for feed companies, especially those involved in concentrated feed production.
Within the industry exchange groups where Jingshu is active, it became clear that many feed enterprises were struggling to cope with the rising costs of raw materials. In response to this situation, Mr. Huang Yongqian from Zhengbang shared his insights on the impact of rising feed ingredients and provided his perspective on the current state of the feed market.
**First, what are the impacts of feedstock price increases on the cost of feed enterprises?**
According to Mr. Huang, the rise in feed ingredient prices directly led to higher feed production costs. Soybean meal and fishmeal, in particular, saw sharp increases, which had a more pronounced effect on companies producing concentrated feeds. Even if other raw material prices remained stable, a 100 yuan per ton increase in soybean meal would lead to a 60 yuan per ton rise in feed costs, with an expected full price increase of around 25 yuan per ton. Although companies could adjust formulas when raw material prices rose, the reality was that all ingredients followed the same upward trend. Protein sources like cottonseed meal, rapeseed meal, and fishmeal also increased, while corn and energy-related materials saw similar price hikes. This created a chain reaction, making cost increases almost inevitable across the entire industry. In such a scenario, raising feed prices became a necessary strategy for maintaining operations.
**Second, how have feed companies adjusted their purchasing strategies amid rising ingredient prices?**
Mr. Huang explained that feed companies adapted by implementing strategic purchases, buying as much as possible or securing futures contracts. Additionally, they sought alternative raw materials to manage costs effectively.
**Third, how should feed enterprises transfer the rising cost of raw materials?**
The main approaches included directly increasing feed prices and substituting raw materials. For example, replacing corn with wheat, soybean meal with cake meal, or importing Peruvian fishmeal with domestic or Vietnamese alternatives.
**Fourth, how has the sales performance of feed been affected?**
Mr. Huang noted that in times of declining breeding profits, rising feed prices worsened the situation. Sales volumes dropped, and farm inventories decreased. Some companies even reduced feed quality by switching from high-grade to medium or low-grade feed.
**Fifth, what advantages do large feed enterprises have during price hikes?**
Mr. Huang highlighted several key strengths of larger companies: access to timely and comprehensive information, allowing them to stock up before prices rise; strong purchasing power and capital for bulk procurement; diversified regional sourcing channels to secure lower-cost suppliers; advanced technological capabilities for developing alternative materials; and skilled procurement teams capable of managing hedging and futures trading. These factors gave large enterprises a distinct edge in navigating the volatile market.
Shandong Yahong New Materials Technology Co., Ltd , https://www.okrooftile.com