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Cherry Valley Muscovy Duck Industry: First-Half Review and Second-Half Forecast

Release date:

2021-07-19

In the first half of the year, China's Cherry Valley Muscovy duck market generally followed a volatile trend—rising sharply before eventually declining, with prices now back to their initial levels as of the end of June. But what exactly has the muscovy duck market been through? And can it break through these challenges in the second half of the year? This article provides a comprehensive review of the first-half market performance, analyzes shifts in supply and demand dynamics, and offers a forward-looking forecast for the remainder of the year. Trading activity weakened throughout the first half, with prices for breeding eggs, ducklings, and meat ducks all experiencing a downward trajectory. By the end of June, prices had fallen back to levels seen at the beginning of the year—reaching parity with the lowest points recorded earlier in 2023. Specifically, the average prices were 1.87 yuan per egg, 2.76 yuan per duckling, and 4.38 yuan per pound of meat ducks.

Lead-in

In the first half of the year, the domestic Cherry Valley meat duck market generally showed a pattern of rising sharply before eventually falling back—by the end of June, market conditions had essentially returned to their original levels. So, what exactly "happened" in the meat duck market? And can it "break through the deadlock" in the second half of the year? This article will provide a comprehensive review of the first-half market performance, analyze shifts in supply and demand dynamics, and offer a forecast for the latter half of the year.

Trading activity has slowed, with the duck meat market showing a consistent downward trend in the first half of the year.

In the first half of the year, prices for breeding eggs, ducklings, and meat ducks all initially surged before gradually declining. By the end of June, prices had fallen back to levels matching the year’s lowest points at the beginning of the year. Specifically, the average prices were 1.87 yuan per egg, 2.76 yuan per duckling, and 4.38 yuan per jin for meat ducks—representing month-on-month increases of 36.42%, 41.25%, and 7.53%, respectively, as well as year-on-year hikes of 71.65%, 108.74%, and 34.23%. As illustrated in Figure 1, the peak prices for these products occurred in February. This was largely due to earlier production cuts, which significantly reduced the supply of ducklings and meat ducks, thereby driving prices sharply higher. Conversely, by June, prices hit their lowest point. On one hand, persistently high temperatures dampened farmers' enthusiasm to restock their flocks. On the other hand, sluggish sales of finished products led slaughterhouses to cut back both their purchasing volumes and duckling-rearing activities, causing prices for both ducklings and meat ducks to decline again.

Figure 1

Hatching losses are worsening, as companies accelerate the pace of capacity reduction.

Figure 2

When calculated based on costs and selling prices, the hatchery stage faces relatively severe losses compared to the farming and slaughtering stages. In the first half of the year, affected by the sharp decline in duckling prices, profits at purchased-egg hatcheries plummeted from 4 yuan per bird to -1.70 yuan per bird—a staggering drop of 142.50%. Meanwhile, the average profit for hatcheries stood at 0.58 yuan per bird, representing a month-on-month increase of 350.91% and a year-on-year rise of 166.91%.

Figure 3

The most direct indicator affecting duckling prices and hatchery profits is the hatch rate. According to data from Zhuochuang Information, sample companies collectively hatched 551.72 million ducklings in the first half of the year, representing a month-on-month increase of 5.76% but a year-on-year decline of 0.72%. In January and February, rising duckling prices significantly boosted hatchery profitability, prompting poultry breeding companies to ramp up both imports and production expansions. However, this surge in supply led to falling prices starting in March, severely squeezing hatchery margins. As a result, smaller and mid-sized enterprises were forced to cull older ducks, while leading companies cut capacity by more than 5%. Consequently, enthusiasm for importing new breeding stock has noticeably waned.

Duck product sales are sluggish, and market conditions remain weak.

Figure 4

In the first half of the year, China effectively controlled the COVID-19 pandemic, and various sectors—including catering and consumer spending—began to recover. As clearly shown in Figure 4, prices for domestic chicken and duck products, as well as white-striped pork, have been fluctuating downward. Specifically, the average price of duck white strips reached 10,051 yuan per ton in the first half, representing a month-on-month increase of 0.06% but still a significant year-on-year rise of 14.72%. The peak price level, consistent with that of ducklings and meat ducks, occurred in February, driven by strong demand and supply dynamics, pushing prices up to 12,233 yuan per ton. Conversely, the lowest price point was recorded in late June, largely due to the ongoing decline in domestic pork and chicken prices. This downturn led to reduced purchasing activity among intermediate traders, slowing down the pace of duck product sales and increasing pressure on manufacturers to offload their inventory. Consequently, prices plummeted to 8,900 yuan per ton—a total drop of 27.25% compared to earlier levels.

Figure 5

After the peak stocking period for the Spring Festival, slaughterhouse capacity utilization rates came under pressure and surged from a low of 39% during the holiday season to 77%, further highlighting the sluggish state of the product market. Profitability in the slaughtering segment remains weak, leading to diminished enthusiasm among companies to resume operations. Although facilities have gradually resumed production post-Festival, output levels still show a significant decline compared to pre-holiday levels. In the first half of the year, key monitored duck-slaughtering enterprises recorded an operating rate of 55.95% and a capacity utilization rate of 63.68%, representing month-on-month declines of 18.19% and 13.91%, respectively, as well as year-on-year drops of 15.47% and 2.99%, respectively.

The supply-and-demand dynamics remain intense, and the duck meat market is likely to first rise and then fall in the second half of the year.

Figure 6

Based on the premise that the epidemic remains under control and policy trends remain unchanged, we offer the following assessment of supply and demand. On the supply side, In the third quarter, high temperatures led to a 3%–8% decline in the fertilization rate of laying ducks. Combined with companies' efforts to reduce production capacity, these two factors are likely to result in a steady yet declining supply of domestic ducklings, potentially leading to lower market availability of meat ducks for slaughter. In the fourth quarter, production capacity is expected to recover slightly, potentially leading to a modest increase in the volume of meat ducks marketed. On the demand side, duck products are considered cooling foods, so sales naturally exhibit distinct seasonal patterns—typically stronger during cooler months and weaker during warmer periods. As a result, shipments of duck products may improve in the third quarter but could face downward pressure and decline again in the fourth quarter. Meanwhile, it’s crucial to keep an eye on how the pork and chicken markets evolve, as these substitutes could influence consumer preferences and pricing dynamics for duck products. According to data from Zhuochuang Information, the domestic market for meat ducks is projected to follow a "first rise, then fall" trend in the second half of the year, with average prices slightly lower than those seen in the first half.

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