There is concern that the spread of bird flu in China will hamper demand for animal feed, as livestock owners cut their herds due to falling hog prices.
Feed production fell in 2013 for the first time in almost a decade as an outbreak of H7N9 cut demand, and output this year may be flat from 2013, according to a survey of four Chinese feed mills and three local analysts by Bloomberg News. The China Feed Industry Association said annual growth exceeded 7 percent in the five years through 2012.
Bloomberg said a continued slump in feed consumption by China, the world's biggest soybean buyer, would hurt sales for companies including Cargill Inc. and Tyson Foods Inc.
"It's a total disaster," said Ma Chuang, a partner at animal husbandry researcher Beijing Boyar Communication Co., referring to the spread of bird flu. "Nobody wants to buy chicks in this environment, and soon even breeder birds may be eliminated."
China has reported more than 120 cases of H7N9 in humans, and there have been at least 32 deaths. Some live poultry markets in the country have been temporarily or permanently closed, news agencies report.
Consumption of feed by broilers in 2013 dropped 8.4 percent to 5.1 million metric tons. The decline was partly offset by hog feed, which rose 3.6 percent to 80 million metric tons.
"While we expect a recovery in the pork market in the second half, the next couple of months may be very difficult," said Alice Xuan, an analyst at Shanghai JC Intelligence Co.