Chapter 389 - 184: Silent Nourishment

Chapter 389: Chapter 184: Silent Nourishment

Two weeks had passed since the global grain futures flash crash in mid-August.

During this period, ABCD ceded its vast industrial assets in South America, which were taken over by the COFCO Group, Zhongnong Group, Beidahuang Group, and New Hope Group.

Hailufeng Company, however, had no intention of expanding overseas, instead methodically pushing forward with its domestic strategy.

As ABCD sold off a large portion of its South American assets at low prices, the government finally issued an official announcement. It stated that to achieve its carbon neutrality goals, the country would actively promote the global import of genetically modified soybeans for biodiesel production, and the import volume was set to increase annually.

However, after the announcement, soybean futures prices didn’t rise dramatically, continuing to fluctuate between 2,800 and 2,900 Hua Yuan per ton.

Fortunately, more buyers were willing to take over. Despite suffering heavy losses, ABCD managed to offload a portion of its high-priced contracts at a discount.

And as market expectations stabilized, the landed price of physical soybeans fell from around 3,900 Hua Yuan per ton to a range of 3,100 to 3,200 Hua Yuan per ton.

Domestic soybean procurement prices dropped in response. The farm-gate price in the Northeast Region has been lowered significantly. Non-GMO soybeans with 45% protein content were now being purchased for only 3,100 Hua Yuan per ton, or 1.55 Hua Yuan per half-kilo.

This price was unacceptable to the soybean farmers.

Fortunately, the government promptly implemented a fix. On top of this price, they would provide farmers a subsidy of 0.5 Hua Yuan per half-kilo, allowing them to just about break even.

Of course, this subsidy was only for this year. Starting next year, domestically produced soybeans would no longer receive any related subsidies.

The reason for this arrangement was that Immortal Soybeans were slated for large-scale cultivation starting next year.

By then, Immortal Soybeans grown in the Northeast Region and on the Loess Plateau will yield 500 to 600 kilograms per mu annually, while the Huai-Hai Plain will maintain a stable annual yield of 600 kilograms per mu.

The farm-gate procurement price will hold steady at around 1.5 to 1.6 Hua Yuan per half-kilo. Revenue from one mu of soybeans will be roughly 1,700 Hua Yuan, which doesn’t seem very profitable.

But one must not forget that Immortal Soybeans can be intercropped with wheat and corn. With fertilizer costs increasing only marginally, this translates to an additional harvest of 500 kilograms of soybeans per mu, which is almost pure profit.

As for whether foreign soybean producers would continue to push prices down, that was clearly impossible.

Even for Brazilian Beans, known for their low cost, the planting cost is 250 US Dollars per ton. Adding transportation fees and a 3% export tariff, the average cost per ton comes to 340 US Dollars, equivalent to 2,414 Hua Yuan.

The planting cost of American Soybeans is slightly higher than Brazilian Beans, at around 270 US Dollars per ton. Other costs are similar, bringing the total cost to 360 US Dollars, equivalent to 2,556 Hua Yuan per ton.

Their gross profit per ton was already down to just 500 to 600 Hua Yuan.

Any further price cuts would mean selling at a loss.

Besides, Cyrus was no longer afraid of soybean dumping.

After all, for farmers, Immortal Soybeans were a low-cost byproduct that also enriched the soil. They could be grown on many fields that previously only cultivated wheat or corn.

In other words, the production costs for domestic Immortal Soybeans—aside from a 10 Hua Yuan per mu patent fee to Hailufeng Company, plus harvesting and pesticide expenses—were minimal, as the fertilizer costs were already covered by those for the wheat and corn.

The production cost for Immortal Beans was approximately 500 Hua Yuan per ton (excluding land rent).

This was the key reason why ABCD had to abandon its soybean operations in South America, along with a portion of its corn business.

If they didn’t abandon these assets, they would lose their shirts.

...

「Capital City.」

At Xinfadi Vegetable Market, the Capital City’s premier wholesale market, a dazzling array of agricultural products and foodstuffs were on display, which naturally included meat.

Throughout the market, meat wholesalers had quietly updated their prices.

As of September 11, the highest price for chicken was 10.6 Hua Yuan/kg, the lowest was 9.1 Hua Yuan/kg, and the bulk price was 8.8 Hua Yuan/kg.

The average price of pork was 17.5 Hua Yuan/kg, beef was 51 Hua Yuan/kg, and mutton was 39 Hua Yuan/kg.

Following the sharp drop in seafood prices back in March, the prices for poultry like chicken, duck, and goose, as well as pork, beef, and mutton, were now also trending sharply downward.

This time, however, the drastic price drop wasn’t caused by an influx of cheap imported meat. Instead, it was driven by the fall in feed costs, all thanks to Immortal Soybeans.

Major domestic feed producers had already lowered their wholesale prices, especially for pig and poultry feed high in grain and soybean meal, which saw a reduction of around 20%.

The effect was most pronounced for white-feathered and yellow-feathered chickens. With a growth cycle of only 42 to 70 days, they were the first type of livestock to be impacted by the steep drop in feed prices.

Combined with the previous drop in fishmeal costs, the production cost for domestic white-feathered chickens had fallen to 6.3 Hua Yuan per kilogram for a live bird. This translated to a cost of 7.7 Hua Yuan per kilogram for processed chicken meat (including processing fees).

The market was a hubbub of activity.

"Old Lin, five cases of Grade-A chicken breast, and add three cases of Grade-A mid-wings..."

The meat wholesaler, Old Lin, chuckled as he jotted down the order. "Boss Du, business is booming! Things have been good for you recently, right?"

"Haha! If chicken prices stay as low as they have for the last two weeks, business will certainly be easier," Boss Du said, then added, "Oh, right, give me ten cases of chicken frames, too."

"You want the Grade-A stuff for those too?"

"Of course."

"Same as always, deliver it to my shop in the afternoon."

"No problem."

Boss Du walked over to a wholesale shop for frozen fish products across the way.

The moment he walked in, the balding wholesaler flashed a wide grin and offered him a Panda-brand cigarette. "Boss Du! Hope business is good."