Rapeseed production woes weigh on market
Ukraine is the latest area of concern for the rapeseed complex as industry insiders have commented that frosts across key growing regions within the nation have caused some crops to have darkened or died entirely. These frosts are also combined with the lack of rainfall in early May which could have also harmed yields and production. However, market players were unable to give a definitive level of production loss with the majority commenting at this stage it was hard to determine how significant the losses could be. Yet, some sources within Ukraine said,“Some farms in Dnipro and Kharkiv look like they have lost 40-50% of their winter rapeseed, it’s going to depend, however, on how widespread that damage is across Ukraine”. If production in other rapeseed-producing areas of Ukraine suffers significant issues it could lower production potentially below the 4-4.3 million tonne estimates before the issues according to market players. Furthermore, market players raised concerns over dry conditions in westernAustralia; this is despite recent rains that industry insiders had hoped would alleviate some dryness, particularly in the sub-soil moisture. However, we have learnt that little improvement in the sub-soil moisture levels has been seen and some farmers have now begun to cut back on intended planting volumes on the back of this dry weather and a lack of rainfall forecast for June. Potential production losses from both Australia and Ukraine could be of critical importance to the EU and UK markets as they struggle with their rapeseed production. Estimates for European production vary widely, ranging from 18 million to 19 million metric tonnes, albeit the majority lean towards the lower end of the spectrum with a consensus around the 18 million metric tonne mark. Romanian production has emerged as a focal point of concern this week, given the significant output of approximately 2 million metric tonnes in the previous season. However, adverse weather conditions, particularly drought, have led some market observers to estimate this season’s production at 1 million metric tonnes or lower. Moreover, uncertainties loom over actual planted volumes, with a notable decrease observed in rapeseed planting in Romania due to diminished crop margin shortly before planting. This discrepancy could potentially lead to steeper production declines than initially estimated. A year-on-year loss of approximately 2 million metric tonnes for the EU, if production estimates trend towards the lower end, could exert considerable upward price pressure on the European rapeseed complex. This upward price pressure was thought to be somewhat allayed by imports from Australia and Ukraine later in the2024/25 season however, if these nations produce a poor crop, it could mean that either these imports are not available, or they are higher priced as supply could be severely limited. The lower available supplies may mean that competition for the available supply could be fierce thereby potentially increasing prices across the rapeseed complex in the near term according to market players.
Russian wheat production estimates lowered amid adverse weather conditions
Concerns are mounting regarding harvests in key wheat-producing regions, particularly Russia. Unseasonable frosts have negatively impacted crops, leading to a downward revision of production estimates. The Institute for Agricultural MarketStudies (IKAR) has lowered the 2024/25 wheat production forecast by 2.5 million mt to 83.5 million mt, while some traders predict a steeper decline as low as 80 million mt. This represents a significant drop compared to the USDA’s initial estimate of 88million mt for Russian wheat production in 2024/25. Moisture deficits in Southern andCentral Federal Districts are slowing spring cereal crop planting.According to market players spring wheat planting is at its slowest pace since 2018.A source added “There’s still no big sign rain desperately needed by wheat crops in eastern Ukraine and southern Russia. Time is running out for these regions to salvage their harvest potential. Rain is crucial by early June to avoid significant damage to the wheat yield.” Additionally, wheat export potential has been lowered by 2 million mt to 45 million mt in the 2024/25 season. This reduction signals a tightening supply, potentially leading to higher global wheat prices.According to market players, Russian milling wheat price increases have intensified across Russia, spreading from the south of the country to other regions, notably the area that sits in Europe. Farmers are worried due to the need for reseeding frozen fields, resulting in slower sales and shipments. At the same time, wheat buyers are concerned about potential shortages and rising prices, prompting them to increase current price tags. We have learned that Russian 12.5% milling wheat was priced between $235-$237/mt FOB (third week of May). Adding to the global uncertainty, wheat production in the EU and Ukraine is also expected to decline slightly this year.The EU is projected to harvest 2 million fewer mt year-on-year (y-o-y), reaching 132million mt, while Ukraine’s output may fall by 2 million mt y-o-y to 21 million mt, the lowest since the 2013/14 season. The potential for lower production in major wheat-producing regions will likely put upward pressure on global wheat prices.
China soybean market
According to market sources, China’s agriculture minister – Tang Renjian has been removed from his position with the Central Commission for Discipline Inspection (CCDI) and National Supervisory Commission attributing the removal to corruption charges. Before his dismissal from office, the ministry stated plans to implement a new law aiming to ensure grain self-sufficiency. Governmental and political changes in the top global soybean and by-products (oil and meal) consumers will be a critical watch point for trade dynamics and consequently prices.
China in the past months has turned to South America – Brazil and Argentina for soybean supply owing to expectations of ample supply from both countries. However, heavy rainfall and flooding this month in Brazil have dampened soybean production prospects with logistical constraints also reported. This has thus led to an increase in global soybean and soybean oil prices with China reportedly increasing buying activity to boost its reserves. Market sources have reported purchases of at least two shipments of US-origin beans last week with further speculations of these purchases being for its reserves. Soybean oil reserves in Chinese ports as of 28th May reached 794,000 metric tonnes, a 4.8% increase on the week and up 9.8% compared to the same period last month.
Anti-dumping probe into Chinese lysine imports launched by EC
The European Commission (EC) has initiated an anti-dumping investigation into Chinese lysine imports into the EU following a complaint from METEX NOOVISTAGO, the EU’s sole producer of lysine. The complaint alleges that imports of lysine from China are being sold at unfairly low prices, causing significant harm to the EU’s feed additive industry.
The EC has determined that there is sufficient evidence to warrant a detailed investigation into the dumping allegations. According to a notification issued on 23 May, the probe will cover the period from 1 January 2023 to 31 December 2023, with a broader examination of trends from 1 January 2020 onwards.
The METEX NOOVISTAGO complaint itself was originally filed on 8 April 2024. The amino acid producer claims that Chinese lysine suppliers are benefiting from distorted domestic prices and costs. Specifically, the complaint highlights issues such as land, energy, capital, raw materials, labor, and chemical industry distortions. METEX NOOVISTAGO says it provided evidence showing that increased imports from China have adversely affected the EU feed additive industry’s sales volume, market share, pricing, and overall financial health.
Should the investigation confirm that dumping has occurred and has harmed the EU feed additive industry, the EC said it will consider implementing measures to protect the sector, in line with EU trade defense regulations. Full article on website.
Copper sulphate prices surge amid metal supply-demand imbalance
Copper sulphate spot prices have surged to record levels due to high copper metal prices. In the US, spot indications averaged $1.62/lb, marking an all-time high since Feedinfo began tracking these prices in 2021. In Europe, spot prices climbed to €2,895/tonne, a two-year high.
Copper sulphate is 25% copper and closely tracks copper metal prices on the trading exchanges. Copper prices have been on an upward trend since the end of 2023. They have surged over 20% since mid-February 2024, reaching a two-year peak of more than $10,000/tonne due to copper ore shortages.
The price of sulphuric acid, another important ingredient, depends on the oil and gas market. Demand from agriculture and mining also influences prices, with seasonal changes and crop issues causing fluctuations. At the moment, all of these issues are impacting copper sulphate prices at the same time.
US distributors have been quoting higher copper sulphate prices in response to ongoing increases in copper metal. One distributor reported the top price indication in the US at $1.75/lb, with its lowest price rising to $1.65/lb. A dairy industry buyer confirmed a transaction for multiple truckloads at $1.59/lb.
For comparison, the cost of copper sulphate in the US was around $1.23/lb delivered at the beginning of the year.
The volatility in the market has caused buyers to retreat to the sidelines whenever possible. Many feed additive buyers have resorted to purchasing copper sulphate “just-in-time” by the truckload in the spot market. Some US buyers who buy weekly to monthly have said they are holding off until prices drop. A South American buyer said it would only buy two months at a time.
Geopolitical issues between China and the US and stronger demand from the electric vehicle segment amid a tighter supply of copper have driven copper prices past the $10,000/tonne mark.
Despite a slight moderation in copper prices over the past week, the metal remains nearly 23% higher over the past year, driven by a significant rally in metals. Traders believe this rally may continue due to a supply-demand imbalance, with production lagging behind demand. Full article on website.
Chinese producers struggle to book containers amid surging freight costs
International sea freight costs from China to various regions, especially South America, have surged massively. There were four main reasons behind the increase in logistic costs, namely politics, demand, shipping strategies, and weather. Many feed additive suppliers have reported struggling to book containers for export. However, prices for most fermentation-based amino acids have been on a downward trend for the past two weeks.
A Chinese producer said that the sea freight rate has soared recently, and it may affect supply in South America, North America, and Europe. To date, South America has been most affected, including shipment costs and delays in arrival time. The source mentioned that June shipment offer prices to North America and South America had surged more by a factor of more than four compared with January, while prices to Europe had surged by a factor of three.
A second Chinese producer said that it was struggling to book any containers and would consider adjusting prices due to the rising costs of sea freight. It added that there have been numerous shipment delays and that shipping was $8,000 per container to South America and $5,000 per container to Africa.
For fermentation-based amino acids, most producers have kept their offer prices stable for this week, as the fluctuation in sea freight costs exceeded that in amino acid prices.
A lysine producer noted that customers were mostly in a wait-and-see mood, but it expected a higher enquiry wave within two weeks as buyers have to purchase material to meet their consumption needs; also there were not much space for prices to drop further, it said.
A trader said that the current situation has led to accumulated cargo at ports. Full article on website.
VTR Bio-tech buys 49% stake in Victory Enzymes GmbH
Guangdong VTR Bio-tech PTY announced that its subsidiary, VTR Biotech PTY Limited, has purchased Phytobiotics Futterzusatzstoffe GmbH’s 49% stake in Germany-based Victory Enzymes GmbH (VE) for EUR 1.2 million (approximately USD 1.3 million), using its own funds.
Chinese enzyme manufacturer and parent company, Guangdong VTR Bio-Tech, currently holds a 51% stake in VE, with its subsidiary now owning the remaining 49%.
The company said the new acquisition “will enhance the development of our overseas marketing network and improve the efficiency of business decision-making…”
Dutch feed cooperatives ABZ and Vitelia explore merger
Dutch feed cooperative ABZ UA, formed on 29 April 2024 from a merger between ABZ De Samenwerking and De Valk Wekerom, is exploring a new merger with Coöperatie Vitelia UA, another Dutch cooperative which is strongly represented in the vegetable, tree nursery, arable farming, and cattle farming sectors via Vitelia Agrocultuur, as well as in the compound feed sector via Vitelia Voeders.
Vitelia Voeders has two production locations in Oirlo and Ysselsteyn and a storage and transhipment facility in Wanssum.
In compound feed, the proposed merger would equate to 10 feed factories, and two storage and transhipment locations. Together, both cooperatives produce more than 1.325 million tonnes/year of compound feed.
Vitelia and ABZ will enter a strategic partnership as of 3 June and start working together in several areas, the cooperatives said.
Nutreco’s Nanta plans to reduce workforce at Valladolid feed factory
Adisseo Nanta, the Iberian compound feed division of Nutreco, is planning to cut up to 40 jobs at its feed production plant in Tudela de Duero, near Valladolid.
Nanta informed UGT and CCOO representatives and the factory’s employees on 20 May of its intention to initiate an employment regulation plan at the factory. The factory has a workforce of around 50 people.
In 2023, Nanta had 21 factories in the Iberian Peninsula, 18 of which in Spain, three of them in Castilla y León. In addition to the Tudela de Duero plant, it owns Piensos Nanpro in Tabanera la Luenga (Segovia) and Nutreco Animal Nutrition Iberia in Pobladura del Valle (Zamora).
Written by Jake Mills-Zivanovic
