February 5, 2020 / 3:45 AM / 17 days ago

UPDATE 2-China's Dalian egg futures rise as demand seen returning

(Updates to add price chart)

SHANGHAI, Feb 5 (Reuters) - Egg futures on China’s Dalian Commodity Exchange jumped in early trade on Wednesday, rising by more than 4% on expectations that demand and consumption for protein will recover in the longer term despite a coronavirus epidemic.

Chinese commodities markets slumped early this week on their return from an extended Lunar New Year break, with several futures contracts hitting downside limits, as investors worried the virus outbreak would dampen consumption in the world’s second-largest economy.

The most actively traded egg contract was last up 4.5% at 3,259 yuan ($465.39) per tonne, but was still about 6% down from prices before the holiday break.

“The earlier price falls were overdone, the market is now correcting as the demand and supply of eggs is not as bearish as expected,” said Yuan Song, research director at consultancy China-America Commodity Data Analytics.

“Apart from the Hubei region where egg trade is still stagnant, egg trading in other regions is recovering,” he said.

Further out, demand was expected to recover but supply could decrease as farmers would find it difficult to maintain stocks of hens.

“Current egg prices are causing serious losses for breeders. Laying hens are expected to be culled in large volumes, and there’s very little replenishment,” Yuan said

Some poultry farmers in Hubei, the province at the heart of China’s coronavirus outbreak, are euthanizing young birds as new rules to contain the disease have paralysed the transport of feed supply and live animals to slaughterhouses.

Chinese authorities on Tuesday ordered local governments to ensure disruptions to the transportation of animal feed and livestock are kept to a minimum during the coronavirus outbreak.

The coronavirus epidemic, which has now killed 490 people in China and infected more than 24,000, has affected trade around the globe as exporters, miners and manufacturers face delays and potential shipment cancellations. ($1 = 7.0028 Chinese yuan)

Reporting by Emily Chow; Editing by Tom Hogue and Richard Pullin

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