Driven by strong consumer demand for dairy products, China’s dairy farming industry is experiencing rapid expansion and increasing herd size, said the USDA’s Foreign Agriculture Service, in a release.
Demand for forage products is rising as large, modern dairy farms use more high-quality forages like alfalfa, timothy hay and oat grass, the FAS said. Imports of alfalfa hay and other forage products increased this year, but oat grass imports declined.
In the long run, the FAS said it was likely that China’s demand for high-quality US forage products will continue to grow.
CHINA’S INCREASING DEMAND FOR IMPORTED FORAGES
Statistics show China had nearly 10.5 million dairy cattle in 2019, the FAS said. In the last two to three years, increasing investments of dairy farms in China’s north and northwest regions have resulted in a rapid expansion of dairy herds.
Corn silage, mainly produced in China, is the major forage used for dairy, the FAS said. China also produces other forages like alfalfa, sheep grass and oat grass, but output is insufficient to satisfy demand, leaving room for imports.
Import statistics from the General Administration of Custom of China show China imported more than 1.3 million tonnes of grass hay in the first nine months of 2021, an increase of 6.1%, the FAS said. Total import value reached $484 million, an increase of 7.6%. The average CIF price of grass hay was about $365 a tonne.
ALFALFA HAY IMPORTS
China imported 1.16 million tonnes of alfalfa hay in the first nine months of 2021, an increase of 10.7%, the FAS said. The US exported nearly 1 million tonnes to China in the same period, accounting for 84.1% of China’s total imports, with a value of $430 million.
Average cost, insurance, and freight price of US alfalfa hay was $379.58 a ton, the FAS said. Spain is the second largest source of dehydrated alfalfa on the market, with a total quantity of 109,200 tonnes, followed by Canada, South Africa, Sudan, Bulgaria and Lithuania.
DECREASING OAT GRASS IMPORTS
China is also a major importer of oat grass, and all of it comes from Australia, the FAS said. In 2020, China imported more than 320,000 tonnes with an average CIF price of about $332.80 per tonne.
However, most 2021 export permits for Australian oat grass facilities expired and were not renewed, leaving only three facilities eligible to export to China.
GACC statistics show that China imported 161,100 tonnes of oat grass from January to September, a decline of 34%, the FAS said.
CATTLE, BEEF RECAP
The USDA reported formula and contract base prices for live FOB steers and heifers this week ranged from $141.72 to $143.75 per cwt, compared with last week’s range of $138.98 to $140.92. FOB dressed steers and heifers went for $219.10 to $222.88 per cwt, versus $209.66 to $220.75.
The USDA choice cutout Wednesday was down $3.92 per cwt at $264.11, while select was off $2.59 at $253.09. The choice/select spread narrowed to $11.02 from $12.35 with 124 loads of fabricated product and 38 loads of trimmings and grinds sold into the spot market.
The USDA reported Wednesday that basis bids for corn from livestock feeding operations in the Southern Plains were unchanged at $1.30 to $1.40 a bushel over the Dec futures and for southwest Kansas were unchanged at $0.40 over Dec, which settled at $5.84 3/4 a bushel, down $0.01 1/2.
No delivery intentions were posted against the Dec live cattle contract Wednesday.
The CME Feeder Cattle Index for the seven days ended Tuesday was $161.16 per cwt up $0.20. This compares with Wednesday’s Jan contract settlement of $163.40 per cwt, down $1.62.