Severe overcapacity of grandparent layer breeding stock, China's market supply exceeds demand

In 2014, egg prices in China continued to rise, and in late August the national average purchase price of eggs exceeded 11.0 yuan/kg, the highest price level in nearly 5 years. The fundamental reason for the continued rise in egg prices and their reaching a historic high was the decline in layer inventories. Statistics from the China National Poultry Industry Association show that in May 2014, China's layer inventory fell 12.8% year on year and was flat month on month. It is expected that the inventory in June will still decline by about 10% year on year.

Although layer inventories fell by a relatively large margin, the capacity of upstream layer breeding stock was severely excessive.

At present, China's commercial layer inventory is 1.2 billion birds. On this basis, the annual replacement volume and demand for parent stock are estimated at 15 million sets and 21 million sets respectively, and the annual replacement volume and demand for grandparent layer breeding stock are 250,000 sets and 360,000 sets respectively; while an annual layer inventory of about 350,000 sets is the optimal balanced state.

Statistics show that since 2011, China's grandparent layer breeding stock inventory has continued to increase, reaching 520,000 sets in 2013 and about 700,000 sets by the end of May 2014. From January to May 2014, the average national inventory of grandparent layer breeding stock exceeded 600,000 sets, an increase of about 15% compared with the same period in 2013, exceeding actual demand by nearly 50%.

Statistics from the China National Poultry Industry Association show that from January to May 2014, the average inventory of parent layer breeding stock was 4.87 million sets. Based on the estimate that the parent layer breeding stock inventory of monitored enterprises accounts for 20% of the total parent layer breeding stock inventory, the national parent layer breeding stock inventory is about 24.30 million sets, exceeding actual demand by about 15%.

Fortunately, however, imports of grandparent layer breeding stock fell sharply in the first half of 2014. In the first half of 2014, China's imports of grandparent layer breeding stock were 54,400 sets, a decline of more than 2 times compared with the same period last year.