Market Intel
Purchasing Contracts:
Fine Print at Bottom Gets Big at Top
Last year at this time, imported ingredient purchasing contracts included the “tariff caveat” in fine print at the bottom, legalese to remind the buyer about the vagaries of international trade.
These days, you cannot miss the bold WARNING! at the top — this price can change.
Despite ongoing tariff uncertainties, ocean container shipping rates continue to decline from the surge two months ago. A Market Intel source notes that the initial impact of U.S. tariff increases announced in April “has not been sustained.”
Amino acids: Sources point to the European Union on the verge of initiating an anti-dumping ruling against China for its lysine exports. Even so, AA markets remain quiet overall, with prices “eroding” for tryptophan and steady to lower for others, including threonine. Sources report some stockpiling, but plentiful soybean meal is keeping a lid on demand. Suppliers are trying to push up prices on DL methionine, given stronger demand and supply allocation of hydroxy analog and liquid product.
Vitamins: Prices are trending down for most vitamins, too, reflecting a wait-and-see attitude toward the vagaries of global trade policy. While current prices for vitamins A and E are lower, vitamin D3 prices fluctuate in a narrower range. Complicating the Q3 outlook are numerous scheduled vitamin (and amino acid) plant shutdowns in China, even as ocean freight rates are now trending lower.
Trace minerals: Prices for copper sulfate are up at bit with tribasic copper chloride (TBCC) up significantly. Zinc sulfate prices remain steady.
Fat products: Veg-animal blend prices are up slightly with increased demand.
Soybean meal: Basis prices for SBM are steady, but the board is down significantly. Renewable fuels policy is taking effect, which also impacts distillers. Basis price for other soy protein products continues steady with new crop basis beginning to rise.
Canola meal: Prices for old crop product are weakening while new crop basis price is gaining strength. There are fewer Canadian acres planted this year and ongoing worries about dry summer weather.
Blood products: Prices popped up for the Independence Day holiday but now are sliding lower. Steady prices are likely to continue until the Labor Day holiday. Ongoing uncertainty: How immigration policy is impacting labor for ag and food businesses.
P & K: Prices are slightly stronger, with feed-grade suppliers of phosphates trying to match fertilizer pricing despite being well past the season of highest demand. Potassium chloride (KCl) remains steady but magnesium oxide (MgO) is up a bit. Sources report tight supply of quality domestic product and reduced inventory of Chinese MgO due to the shutdown of a major production plant. Â
Distillers: DDGS prices are trending lower, thanks largely to cheap soy and corn as well as renewable fuel policy. Exports are much lower and domestic inventories are growing.
Wheat midds: Prices are steady even with summer harvest adding to supply. Sources report at least one major plant expansion in the offing. However, there’s ongoing attention to mycotoxins due to earlier wet weather and farmers cleaning out grain bins.Â
Soy hulls: Prices remain steady to weaker. Supplies are adequate despite processing plant summer shutdowns.
Over the horizon… August deadlines loom for unilateral trade deals. Tariff trial balloons are pushing ingredient markets in unexpected directions, making contract caveats critical.