Global Feed Markets: November - December 2011


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Global Feed Markets: November - December 2011

  1. 1. Digital Re-print - November | December 2011 Global Feed Markets: November - December 2011 Grain & Feed Milling Technology is published six times a year by Perendale Publishers Ltd of the United Kingdom. All data is published in good faith, based on information received, and while every care is taken to prevent inaccuracies, the publishers accept no liability for any errors or omissions or for the consequences of action taken on the basis of information published. ©Copyright 2010 Perendale Publishers Ltd. All rights reserved. No part of this publication may be reproduced in any form or by any means without prior permission of the copyright owner. Printed by Perendale Publishers Ltd. ISSN: 1466-3872 NEXT PAGE
  2. 2. COMMODITIES GLOBAL GRAIN & FEED MARKETS Every issue GFMT’s market analyst John Buckley reviews world trading conditions which are impacting the full range of commodities used in food and feed production. His observations will influence your decision-making. the two grain price booms of recent years per annum growth will continue in its feed and each year after that to 2015/16 . Will At this early stage, Lowest grain costs in over a year – bio-fuels. Is bio-ethanol - after a period of relatively flat growth – about to start demand for the next five years. That will need 6/7m tonnes more grain fed in 2012/13 China’s domestic crops keep pace? Official figures suggest they have so far but western some pundits are mopping up any surpluses G as grain costs fall? US corn looking for modest ROWING supplies and renewed which has maintained its highly unusual premium ethanol production has already fears of global economic recession to wheat into latter 2012. been looking with the slide in growth in next year’s cramping demand have slashed grain With wheat supplies far more abundant than maize prices (although the prices again in recent weeks. As we maize and plenty of lower grade wheat from the scheduled ending of blendingUS soyabean plantings go to press, market leaders wheat and maize milling quality problems mentioned above, feeding subsidies in 2012 might also are a good 25% below their 2012 peak prices, of wheat to livestock is already expected to rise be encouraging a ‘make hay and, given normal trading in some markets at their cheapest levels by about 14m tonnes to 126.4m – almost a fifth while the sun shines’ push in in well over a year – and there may be more of total world wheat consumption. If wheat prices this sector). It’s interesting to weather a possible downside to come. dipped seriously on their own loose fundamentals, note that the main growth in Although the EU wheat market itself looks the rationale goes, feed demand would go even US corn ethanol production larger crop. The in fairly fine balance this season (i.e. a forecast higher. Some of this feed gain for wheat is taking now is in exports rather than marginal change in ending stocks), domestic consumption – so US outlook for EU 2012 world wheat supplies have clearly feed corn users, traditionally been moving into a surplus position the main outlet for maize, are rapeseed output is as 2011 crop estimates continued to still paying relatively high prices, grow, led mainly by the ‘Black Sea’ (CIS) not just to wean US drivers uncertain at this stage countries. off dependence on foreign oil What reaction should wheat prices but to help fill car vehicle fuel with good weather offer to this ever loosening supply? Are tanks in Brazil and Europe. they now cheap enough to reflect the Although the UK/European boosting winger known ‘fundamentals?’ One might as grain ethanol industry has had well ask, did they ever really merit going its well-publicised problems, sowings in much of as high as they did in February of this year (almost place in the US, Europe and the former Soviet one might expect lower grain $9/bu, about $330/tonne) on the bellwether Union, some if it a straight switch from maize in costs to have an impact here western Europe but Chicago futures market. After all, while last year’s importing countries in Asia and elsewhere. too. The same applies to a Russian crop failure and wet harvest/quality issues Looking to the medium/longer term for wheat, host of countries who hadtoo much rain delaying in Canada, Australia and Germany deservedly put first indications for 2012 crops suggest higher been thinking about using a firework under the market, world wheat stocks planted acreage as farmers continue to respond to more grain as a renewable fuel and downsizing fell by a mere 2.4% and remained at their fourth relatively high prices in Europe, the USA, probably source before rising grain costs highest level of the past decade. other regions too – so even more wheat. spoiled things plantings in Germany, This inevitably again begs the question, what Already some pundits are fretting about the Will broader feed demand role did speculators really play in driving up wheat price of wheat descending to levels that leave in China and other emerging normally the top and maize prices in 2008 and 2011? Did they over- farmers little or no profit as it did two seasons ago economies maintain the rapid react to fundamentals and are they now doing the (Chicago wheat collapsed to $4.50s/bushel - $165/ pace of recent years in theproducer, and too little same now on the downside amid the ‘risk aversion’ tonne - as soon as December 2008 from a peak of current uncertain economic generated by the bleak global economic outlook. $13 - $478/tonne in February of that year!). We climate? China has been the moisture threatening (some of the selling of grain futures by ‘managed have consistently maintained in this column, ever biggest single factor driving up money’ is also thought to be a cash raising exercise since the Russian crop failure that prices this time feedgrain demand in recent prospects for some to margin recent huge losses on US and other were more likely to come halfway rather than all years, raising its consumption global stock-markets). the way back to those lows. One reason is that by 43% or 44m tonnes in southern/eastern Many traders and analysts think wheat prices costs of production have risen – inputs, land etc the past decade to account would even now be far lower than the recent $6/ all saw an above-inflationary jump when the base for 56% of world growth in member states. bushel (about $220/tonne) recently trading in prices for grains doubled. this sector. Recent Chinese Chicago, were it not for the high price of maize Another reason is the other factor behind official forecasts suggest 4-5% 36 | november - december 2011 Grain &feed millinG technoloGy Grain &feed millinG technoloGy november - december 2011 | 37
  3. 3. COMMODITIES from its September highs Grains Council suggest world plantings for considerably and current projections are for tonnes. However the global out-turn will, as of �209. It’s hard to believe 2012 will increase by 1.6% top 224.6m ha, the a bigger crop than last year’s. EU sowings usual, depend more on weather and yields that this market was trading biggest rises in North America and the CIS. are also seen up amid generally favourable than acreage changes. Yields, for example, fell �281 in February when ‘skies Although total US area could be as much as weather in northern member states but some 3.3% in 2010 but recovered by almost 7% this the limit’ pundits talked of 7% higher, questions linger over the impact of dryness issues in the south/east. Driven by this year, achieving a record average 3.1 tonnes/ an assault on �300. UK feed dry planting conditions affecting about 30% year’s good crops and successful exports (at ha. That’s all the more remarkable when wheat has also dropped to of the key hard red winter crop, the biggest still relatively high prices), Russia is expected to one considers the challenges faced by late about £143 from February component in US expor ts and domestic sow about 5% more. First tentative estimates sowing in Canada, droughts and heatwaves highs of £214/tonne. breadwheat use. Recent rains have helped for 2012 output have been around 690/695m in Western Europe and other weather issues. Despite drought threats analysts think this has been at the expense to the US hard red winter crop, expor t of running down reserve stocks and that prices for this grade dropped to $284/tonne imports, especially of maize, will play a far larger part from next year onwards. in mid-November compared with $310 at the time of oir last review. Quality spring Silo Construction & Engineering However, China has a habit of springing wheats had been the firmest sector after the surprises on the market. While it has been USDA revised down its US crop estimate in Modular square bins buying far more foreign maize this year, it November, pushing fob value up from $390 more than 100 years a reliable partner has not yet lived up to the bullish import to $409/tonne. However, these too appear forecasts of the US Grains Council and to be easing on lack of domestic and export Feed mills Silos others. There is also the possibility that demand a these levels and reports of much Flourmills Bulk handling systems its own economy may slow, putting the better quality from this year’s Canadian crop. brakes on its expanding meat consumption. Most of the credit for cheaper wheat goes Pet Food plants Electric control & Another question is whether US demand to the ‘Black Sea’ former Soviet producers Aqua feed mills Automation systems for feedgrains - running 10/12% lower for who have raised their combined wheat Premix & concentrate the past two seasons – will perk up next output by 31.5m tonnes, 13m more than plants year under these economic conditions? most pundits expected back in the summer. Cereal Processing Mixed messages have been coming from Relentless, aggressive sales by Russia and plants the livestock sectors, more encouraging for latterly both Ukraine and Kazakhstan have cattle and pigs than for poultry. European virtually dominated the world import markets, Oil seed processing grain feeding is also down about 7% still undercutting US and European grain by as from its 2008/9 level. Will that pick up much as $30/50 per tonne, depending on SCE WWW.OTTEVANGER.COM in 2012? types and grades. Top importers like Egypt For oilmeals, led by soyabeans, the and other Middle Easterm/North African Aalten - Holland Moerkapelle - Holland prospect is largely encouraging. The US countries have been only too pleased to reap T +31 (0)543 47 26 88 T +31 (0)79 593 52 97 did have a smaller than expected soya this bonanza, shunning the US, Europe and F +31 (0)543 47 54 75 F +31 (0)79 593 11 47 crop this year, considerably under last other countries that baled out FSU shortages E E year’s, but lower crush and exports will during last season’s Russian export bans and SCE is a partner with keep stocks from getting too tight before Ukrainian quotas, duties etc. the international season’s end. Latin American soya crops Along with gradually descending maize have meanwhile gone in quickly and are prices (to which wheat has pinned its fortunes feed & food industries • getting good weather, promising earlier this year), this intense export competition has consultancy & engineering firms • than usual, possible record harvests next been the biggest factor driving down Chicago machine & plant designers • spring. US soya exports are already down and European grain futures markets. amid Latin American competition from the Wheat output is also up this year by more region’s huge 2011 crops which left record than expected in Europe and China (about CRAFTMANSHIP IN THE ANIMAL FEED AND FOOD PROCESSING INDUSTRY stocks to dispose of this autumn at a time 2m tonnes each), India (+5m), Canada (1m). when the US usually has the market to Even a 5.7m tonne crop decline for the leading itself. This, along with the drop in grain exporter, the USA, has been overwhelmed by prices and the macro-economic gloom has the staggering 40m tonnes added to output brought soya costs down sharply too and, if elsewhere. As a result, world wheat output is all goes well with the Latin American crops currently expected to finish 2011/12 at about in the next few months, further price cuts 683m tonnes but it would not be surprising might not be ruled out. to see that creep up over 685m when all the Black Sea crops have been fully counted. Main commodity highlights That’s about 20/25m more than predicted in July. Wheat consumption on the other hand is since our last review seen rising this season by about 23m tonnes. Wheat – further price cuts possible That’s above the long term trend, thanks to European markets in recent weeks the boom in wheat feeding, but it will still lag have taken much of their lead from the production by enough to add at least 6m, US markets, especially the Chicago futures, maybe 10m or more (when all the CIS crops where nearby wheat deliveries during are in) to global ending stocks by mid-2012. November were trading at some of their These are already forecast at a 10-year high lowest levels since July 2010. of around 203m tonnes, a stock/use ratio of The Paris futures market fell to a new 30% about 15.6 weeks supply. low of �179/tonne on the front month Early forecasts from the International38 | november - december 2011 Grain &feed millinG technoloGy Grain &feed millinG technoloGy november - december 2011 | 39
  4. 4. FACTORS IN THE MONTHS AHEAD crop), world output is up by 30m tonnes this season against a consumption rise of • How much maize will the US sow next spring? Probably more than this year• Big Ukrainian and Kazakhstan crops are 22m. As in the USA, this will still leave world • Will Ukraine sow even more maize next stepping up their 2011/12 exports, willing 2011/12 ending stocks (next September) spring on land vacated by failed/unplanted and able to fill the ‘cheap wheat’ vacuum about 7m-8m tonnes down and very low winter wheat and bartley crops? Solution Engineering in Bulk Handling once Russia starts to wind down its own in relation to consumption needs. This is • Global economic problems continue to aggressive 2011/12 campaign. more encouraging for die-hard maize bulls erode consumer confidence, negative• But can landlocked Kazakhstan get the grain and demands a larger world maize crop next for meat/feed demand and a continuing out fast enough through Russia (clogged year. Currently, pundits are predicting the US restraint on grain & oilseed prices with its own record grain traffic) or Ukraine will sow more maize next spring but, (heading the same way as it markets record as always, area will depend on relative maize versus wheat exports). And how corn prices versus soyabeans and on the much quality milling will Ukraine actually weather, which can cause huge shifts in have as opposed to lower/feed grades? acreage to soyabeans if maize planting gets delayed. Until these uncer tainties are resolved, in second quarter 2012, there is always the possibility of another bull run on maize prices and where maize goes, wheat must follow. For the moment, however, the competition from South American and the former Soviet Union is setting a low world import price, considerably below US fob and Chicago futures levels. So is• Will the Ukraine and the USA yet pull the abundance of feed wheat mentioned reasonable 2012 crops out of a challenging above. dry autumn/early winter period? US maize exports are falling behind• Will the US plant a lot more spring wheat official forecasts amid the competition in 2012 to make up for this year’s shortfalls? and while these only make up about 12% • Speculators’ interest in commodities – likely of US maize disposals (the rest split mainly to be more evident in maize due to the tightCoarse grains – between feed and ethanol), this has been forecast US/world ending stocks for 2011/12 Unlike wheat, maize is still a fairly tight weighing on prices. – spring planting time could see them returnmarket on paper. The US crop has turned For the EU itself, maize supplies have been as buyers if the weather plays upout smaller than expected, lower than last boosted by a record crop around 64.7 tonnes • Ethanol competition for maize supplies –year’s by 3.5m tonnes and about 8m under compared with last year’s 55.8m. Demand could resurge if maize costs continue toestimated domestic and export needs. The is expected to expand by about 2m tonnes, fall – helping prices find a bottomtighter ending stocks resulting, their lowest for using up all the extra supplies but importsdecades in terms of consumption, are keeping will drop away sharply from the past season’s Oilmeals cheaper toosome of the speculative money on board in unusually large 7m, probably to about half Since our last review, soya meal prices havethe Chicago futures market (although much that level. come down by about 15% on the US market,of it jumped ship on the most recent price putting them about 26% below their Augustdrop in November). Another restraint on maize prices is the FACTORS IN THE MONTHS AHEAD highs and at their cheapest level since June last year. Meal prices have fallen as soyabeanrelatively looser foreign supply. Thanks to • China’s maize ‘deficit’ remains a live issue. supply prospects have improved – the liftingrecord crops in the former Soviet Union and If maize prices fall further it may take a lot of a threat of tight US end-season stocks andexpected big harvests in South America next more imported maize after all – bullish for a far better outlook than expected for theyear (not to mention the EU’s own record prices coming Latin American crops. the new standard in cutting edge technology - massively enhanced user Resource Optimisation experience - truly modern deployment opportunities - Software all with the robustness and stability you expect from Format NOW AVAILABLE... For information and pre-launch updates please e-mail t:+44 1483 726 081 formatinternational.com40 | november - december 2011 Grain &feed millinG technoloGy PREVIOUS PAGE Shipunloaders & Shiploaders NEXT PAGE
  5. 5. COMMODITIES Perfection in grain milling – a highly demanding task. Antares sets new standards Although USDA is currently predicting world their meal production up amid the smaller • Relative soya/maize prices & weather when for round-the-clock milling. The self-contained roll pack and reliable product soyabean production about 5m tonnes lower 2012 crop. the US plants next spring for 2011/12, the gap may shrink if the South At this early stage, some pundits are looking • EU winter rapeseed plantings - up or down feed ensure precise and consistent flour. Maximum hygiene is guaranteed thanks American crops exceed current forecasts for modest growth in next year’s US soyabean for 2012? for a mere 2m tonne increase in this region. plantings and, given normal weather a possible to clever insulation, integrated product inlet aspiration and stainless steel lining. larger crop. The outlook for EU Experience a new level of ease of use and quality from ergonomic controls 2012 rapeseed | output is and operating reliability to the highly impressive design. Antares – The New Art uncertain at this stage with good of Milling. weather boosting winger sowings in much of western Europe but too much GLOBAL MARKETPLACE r a i n d e l ay i n g and downsizing Bühler AG, Grain Milling, CH-9240 Uzwil, Switzerland, T +41 71 955 11 11, F +41 71 955 66 11 plantings in, Germany, normally the top FOR THE POULTRY AND FEED INDUSTRIES producer, and too lit tle moisture threatening pr ospec t s for Antares MDDR-600. Based on high bean prices and good weather some southern/ at planting time – and plenty of moisture since eastern member Small Roller Mill for – it would not be surprising to see more than states. this coming out of Latin America. High Requirements. Either way, world soyabean crush will still rise by about 10m tonnes, boosting meal FACTORS supplies by about 8m or so. About half of IN THE Compact dimension. Four-roller mill with roll length of 600 mm that increase is expected to be consumed within China, 1m tonnes or so within the MONTHS EU, 500,000 in Brazil, the rest spread over a number of smaller users. AHEAD Sanitation. Top hygienic standards for food safety. Higher EU soya meal usage is replacing • Latin American rapeseed meal after a smaller European canola soyabean crop Outstanding precision. Ultra-precise crop cut domestic rapemeal production. weather settings, consistent flour. The EU’s large 2011 sunflower crop will also • Chinese expand use of this meal by about 600,000 consumption and The 2012 International Poultry Expo • Perfect grinding. Exposition The World’s Largest Poultry and Feed Technology Powerful roll pack, tonnes but soya will retain its usual dominant timing of imports 60 % mar ket and International Feed Expo will be • highly consistent grinding. Over 20,000 Industry Leaders from Over 100 Countries sha r e of t he held January 24 – 26, 2012, and the • Over 14 Acres of Exhibits p r ote i n m e a l week of the Expo has been officially • Ultimate design. The perfect Exceptional Educational Programs Planned for IPE Week combina- sector. silos ships designated as “IPE Week” with an tion of ergonomics and performance. - International Poultry Scientific Forum Globally there emphasis on educational programs - Hatchery-Breeder Clinic is no shor tage THE UTMOST rounding out the week-long event. - Pet Food Conference of meal supply, BULK RECLAIMER - Animal Agriculture Sustainability Summit to which soya will contribute The Expo is shifting to a TUESDAY, - Workshops on Safety and Environmental Issues about 70% . This WEDNESDAY, THURSDAY format to - Symposium on Egg Production is thanks to a increase the education programs - Pre-Harvest and Food Safety Conference r ecor d wor ld available to attendees. - Executive Poultry Outlook sunflower crop simple, maintenance free, automatic, efficient on most bulk products*, unbeatable reclaim rates (Russian and * cereals, oil seeds, sugar, flour, soya bean meal, wood pellets, wood chips, fly ash, cement, sulphur, charcoal, RDF etc… VIBRAFLOOR F-71680 Givry +33(0)385 440 678 +33(0)680 964 144 Ukrainian output also soa r e d ) , a big leap in wagons domes containers cottonseed/ meal production and r apeseed crushers drawing down carryover stocks to keep Innovations for a better world. JANUARY 24-26, 2012 | GEORGIA WORLD CONGRESS CENTER, ATLANTA, GEORGIA USA42 | november - december 2011 Grain &feed millinG technoloGy PREVIOUS PAGE NEXT PAGE
  6. 6. This digital Re-print is part of the November | December 2011 edition of Grain & Feed Milling Technology magazine. Content from the magazine is available to view free-of-charge, both as a full online magazine on our website, and as an archive of individual features on the docstoc website. LINKSPlease click here to view our other publications on November - December 2011 • See the full issue In this issue: • African advances Animal feed milling is one of the most • • Mycotoxins an overview Database for animal diet • Visit the GFMT website buoyant activities in formulation the agri related field techniques: A glance to last • Contact the GFMT Team • Get in line decade Process analysis solutions open new opportunities for improved • Food safety profit and quality in the grain milling industry • Recent advances in • Optical sorting • Subscribe to GFMT rapid grain Optical sorting has come of testing age and should be considered as a serious option for inclusion in any modern wheat cleaning plant A subscription magazine for the global flour & feed milling industries - first published in 1891GFMT11.06.indd 1 30/11/2011 17:28To purchase a paper copy of the magazine, or to subscribe to the paper edition please contact our Circulation and Subscriptions Manager on the link adove. INFORMATION FOR ADVERTISERS - CLICK HERE Article reprints All Grain & Feed Milling Tecchnology feature articles can be re-printed as a 4 or 8 page booklets (these have been used as point of sale materials, promotional materials for shows and exhibitions etc). If you are interested in getting this article re-printed please contact the GFMT team for more information on - Tel: +44 1242 267707 - Email: or visit PREVIOUS PAGE