Eggs do not weigh as much in China’s consumer price basket as pork does, but their prices are equally, if not more, susceptible to market swings. Local farmers and business leaders hope that the egg futures will prepare them better for industry ups and downs in the future.
Egg prices are volatile, just as their fragile shells. For Zhang Dexiang, a local farmer from Xishui County in Central China, this lesson was learnt the hard way. He bought ten thousand layer hens early this year, but tumbling egg prices knocked him down the ladder of fortune.
"I was extremely painful, but I had to sell those chicken at five yuan each. Many others went broke. I paid too much but all my efforts ended in vain," Zhang said.
Last year, egg prices in China spiked 60 percent from January to July, luring many into the business. Yet rising competition, soaring prices of chicken feed, and a bird flu breakout in April have led to a price freefall and now everyone struggles to break even. In Xishui County, which is well known for its poultry industry, 20 million layers were either dumped or terminated in one month. Business leaders hope that the egg futures will do them a favor.
"The biggest edge is that we are able to track the price, meaning we can strategize our plans for production, procurement, and sales based on egg price movement," Yang Guang, Chairman of Hubei Shenlu Group, said.
Shenlu Group runs poultry businesses from feeding, sales, to distribution, and rakes in 2 billion yuan, or 328 million US dollars sales every year, according to company website. The company has signed agreements with local farmers to share market intelligence and pledges to become the egg futures’ designated settlement site, which will beef up local businesses for stronger market volatility.
Source CCTV
