In
2013 the domestic corn seed market is experiencing serious oversupply, falling
prices, uneven quality of varieties and poor performance by seed companies,
according to Seed China News issued by
CCM in July
2013.
Oversupply continues
The
oversupply of corn seeds in 2013 is even worse than that of 2012. According to
National Agro-Tech Extension and Service Center (NATESC), the total supply of
corn seeds in 2013 has reached 2.12 million tonnes while the demand is only
about 1.20 million tonnes, creating 920,000 tonnes of excess inventory. In
comparison, in 2012 the supply of corn seed was about 1.76 million tonnes and
for 1.12 million tonnes of demand, creating excess inventory of 640,000 tonnes.
The increasing oversupply is a result of output growing more quickly than
demand. Actually, the oversupply would be more serious if taking into account
private and illegal seed production.
"Both old and
new products are experiencing excess inventory," says Tong Pingya, a
well-known research expert in the seed industry. "Some new corn varieties,
such as Jingke968, Zhongdan909 and Weike702, have excess inventory of more than
40%, or even as high as 60% for individual ones, not to mention the old
varieties like Zhengdan958 and Xianyu335." Because of this, seed
production bases in Northwest China have cut production this year, especially
for old varieties.
Prices decline
further
Prices
decline further High inventories are pushing seed prices down in 2013 and seed
companies have been waging a price war in the seed market, while farmers took a
wait-and-see attitude. For example, the retail price of Zhengdan958 seeds for
monoseeding marked by seed producers (Beijing Doneed Seed Co., Ltd., Henan
Goldoctor Seeds Co., Ltd., Henan Qiule Seed Industry Science and Technology Co.,
Ltd., etc.) is generally USD6.47 (RMB40) or USD7.28 (RMB45) per bag (around
5,000 grains), but the selling price decreased to below USD4.85 (RMB30) per bag
in some regional markets early this year.
The
deluge of infringing seeds (counterfeit seeds, seeds that are bred without
authorization, ect.) has further depressed the prices. For instance, the
selling of the bulk seeds of Zhengdan958 and Xianyu355 is quite prevalent in
some regional markets, and Zhengdan958 and Xianyu355 bulk seed prices sell for
USD2.59/kg (RMB16/kg) or lower. However, it is illegal to sell seeds in bulk in
China without packaging (except tubers and seedlings that are not suitable for
packaging), in accordance with China's Seed Law.
Uneven quality of
varieties
Although
a number of new corn varieties win the provincial or national approval each
year, few can really surpass the currently leading varieties like Zhengdan958,
Xianyu335 and Xundan20. It is reported that there are over 1,000 corn varieties
in the domestic corn seed market in 2013, most of which are just spurious
products imitating the leading varieties. Actually, the planting of most other
corn varieties is small and scattered, usually with respective planting area
below 30,000 ha., compared with 2 million ha. of planting area of each leading
variety. Actually, many of those small varieties without prominent advantages
are not competitive in the market and will be easily eliminated in a short
time.
Companies face
underperformance
Faced
with oversupply, most corn seed companies are not optimistic about their
performance in 2013. For those lacking promising varieties, the circumstance is
even worse. It is the same with those large seed companies. For instance,
Beijing Doneed Seed Co., Ltd. (Beijing Doneed), the core subsidiary of listed
Wanxiang Doneed Co., Ltd., had declining performance in H1 2013 following a
lackluster in 2012. The company continues to rely heavily on an old seed
variety, Zhengdan958, which has further hurt performance, coupled with the
deluge of infringing seeds. Gansu Dunhuang Seed Co., Ltd. (Gansu Dunhuang) will
also fare poorly due mainly to shrinking sales of Xianyu335, the largest
contributor to company profits.
Some
companies in possession of promising varieties may still fare well. Shandong
Denghai Seeds Co., Ltd. (Shandong Denghai), an R&D-focused corn seed
company, has been promoting proprietary varieties such as Denghai605 and
Denghai618, gradually reducing its reliance on Xianyu335. Shandong Denghai
forecasts a 80%~130% YoY growth in net profits in H1 2013.
With
increasing oversupply and high inventories, a number of producers have cut
production, especially those less competitive companies. Some companies are
also trying to clear inventory by selling at cut-rate prices. In this case the
pressure from high inventory would be somewhat alleviated next year.
Vegetable
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China's
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Winall
Hi-tech forecasts a performance loss in H1 2013
Seed China News, a monthly publication issued
by CCM at the end of every month, mainly covers a diversity of topics,
including market dynamic, company dynamic, crops, seed market, etc. With the
latest news in seed industry and in-depth analysis on government direction and
market competition, Seed China News can provide you with valid information
which would help you make rational decisions in investment, production,
marketing, etc.
About
CCM
CCM is dedicated to market research in China
Guangzhou
CCM Information Science & Technology Co., Ltd.
17th Floor, Huihua Commercial & Trade Mansion, No.80 Xianlie Zhong Road, Guangzhou 510070, China
17th Floor, Huihua Commercial & Trade Mansion, No.80 Xianlie Zhong Road, Guangzhou 510070, China
Tel: 86-20-37616606
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