Market Intel
Unrelenting Squeeze?
Constriction of the Strait of Hormuz and resulting high fuel and macro ingredient costs are putting the squeeze on feed industry margins in the U.S.
As yet, there is no “new normal”. Two months of global energy insecurity and biofuel demand continue to escalate market uncertainties, compounded by challenges getting micro ingredients across the Pacific and through the Panama Canal.
Soybean meal: Old crop SBM basis prices are stronger while board prices are vacillating, but trending up. With new China trade taken into account, canola meal basis is down significantly. Prices for soy protein products are following the SBM markets.
Palm & bypass fat products: Prices continue to rise, not just because of Asian biofuel demand but because palm products are more challenging to export and deliver, including through the Panama Canal. Meanwhile, calcium salt supplies continue to tighten.
Amino acids: Lysine prices remain high with tight supplies under the European Union’s countervailing duties. But Market Intel sources expect inventories to build and prices to soften through Q2, although increasing global energy costs may temper the trend. These higher costs are impacting threonine, although tryptophan and valine prices remain “soft and steady”. DL methionine prices are subject to supply issues, with prices up also for liquid product.
Vitamins: Prices for vitamin D3 appear to have bottomed out and are steady to slightly higher. However, now vitamin A and vitamin E prices are on the rise.
Trace minerals: Prices of copper sulfate continue to rise on industrial demand for the metal, dragging along tribasic copper chloride (TBCC). Zinc sulfate prices also are pushing higher. Prices for manganese compounds remain steady.
Blood products: Prices are steady to slightly higher. Going into Q3, bigger-than-usual Independence Day celebrations are likely to impact prices.
P & K: Slow-to-rise prices for phosphates and potassium chloride (KCl) are moving up, more quickly for bio-phosphate products. Magnesium oxide (MgO) prices are steady to slightly higher.
Urea: There’s softening in the big spike in prices caused by the closure of the Hormuz Strait. However, supplies are likely to be a challenge for South American corn producers later in the year.Â
Distillers: DDGS prices remain high given strong exports. It’s pricing out of hog rations, Market Intel sources suggest, although still attractive for poultry. For dairy, sources say the main issue remains inconsistent quality.
Wheat midds: Prices continue to decline, with even new crop values down.
Soy hulls: Echoing wheat midds, prices on loose hulls are lower, although pellets still command a premium.
Over the horizon… Ongoing oil, gas, and fertilizer market disruption due to war in the Mideast, further complicated by tightening U.S. fuel inventories and Asia shipping delays.Â