When things start to go awry in China – the world’s top wheat producer and largest consumer of cereals in total, there’s bound to be a market impact. Such has been the case over the past month, as a grain market confidently expecting much improved global supplies - and consequent lower costs - found its attention diverted instead to an upsurge in Chinese grain import purchases. China’s problem

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2. GLOBALGRAIN & 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.
China’s problem
caught the cereal
world off-guard,
largely because
it has had a long
run of good luck
with its crops
in recent years,
these frequently
exceeding forecasts
made by western
observers like the
USDA and mostly
keeping pace
with China’s own
rocketing demand
for grain, especially
in the feed sector.
W
hen things start to go awry in
China – the world’s top wheat
producer and largest consumer
of cereals in total, there’s bound
to be a market impact. Such has been the case
over the past month, as a grain market confidently
expecting much improved global supplies - and
consequent lower costs - found its attention
diverted instead to an upsurge in Chinese grain
import purchases.
China’s problem caught the cereal world off-
guard, largely because it has had a long run of good
luck with its crops in recent years, these frequently
exceeding forecasts made by western observers
like the USDA and mostly keeping pace with China’s
own rocketing demand for grain, especially in the
feed sector.
This year, however, a series of problems starting
with a tough winter, droughts in some areas, floods
in others and recent wet harvest weather have
slowed development and/or interfered with sowing
plans – the result, a significant dent in official
production targets. How big a dent is uncertain
at this stage. In the wheat sector, production is still
seen by the USDA and International Grains Council
between 118m and 121m tonnes – similar to last
year’s. However, recent reports have suggested
this is over-rated by at least 10m tonnes and/or
that up to 20m tonne of milling wheat crops have
been lost or downgraded to feed.
China’s maize crop is still expected to increase
this year from 206m to between 211 and
214m tonnes according to the USDA and IGC
respectively. These figures too may be exposed
to some downward revision.
China’s crop problems clearly aren’t on anything
like the scale of last year’s US and Russian droughts
which combined with other global weather issues
reduced world maize output by 28m and wheat
production by 42m tonnes. However, they have
to be seen in the context of China as the fastest
growing consumer of cereals. Its maize consumption
this season will outweigh domestic crops by at least
13m tonnes, possibly much more, wheat by about
4m tonnes (which masks the possibly far bigger
deficit in its milling wheat supplies indicated above).
The bleaker supply assessments have been
backed by a surge in Chinese buying, especially
from the United States, which at the time of writing,
has logged sales to his destination of 3.2m tonnes of
wheat – 10 times as much as at this time last year.
China has also been buying wheat from Australia
and France. The USDA currently sees it importing
8.5m tonnes of wheat from all sources, some trade
China stalls cereal price drop
– for now
Grain&feed millinG technoloGy44 | July - august 2013

3. COMMODITIES
analysts far more, compared with the past
season’s 3.2m and normal imports of only 1m
tonnes or so. China’s maize imports are also
expected to expand to 7m tonnes from the
past season’s 3m, again with a heavy emphasis
on US supplies. Some trade estimates for
these also range higher, to at least 10m tonnes.
China’s pivotal role in cereal supply and
demand extends to its position in the table
of global grain stockholders. The 57m tonnes
of wheat and 55m tonnes of maize China is
reckoned to store in its strategic reserves is
equivalent to one third of all world stocks of
cereals. Does China really hold these large
stocks and/or is their quality (some of it would
be very old) highly questionable? These are
questions the
trade frequently
asks but the way
China calculates
and protects
its data make
them impossible to answer with more than
an educated guess. It’s also possible that
China is looking at world cereal prices that
have collapsed by almost 30 percent in recent
months to their cheapest in over a year (almost
three years in the case of forward maize
deliveries) and thinking this is a good time to
build up the reserve stocks it has always liked
to hold for food security. Imported maize is
cheap compared with China’s own production
– and probably of a more reliable and regular
quality too. The quality factor is clearly an
incentive for the wheat purchases too. China
has always liked to use some higher grade
foreign milling wheat to improve the strength
of its flour grist and this season’s emphasis is
on US soft red winter milling wheat suggests
the bulk is going to China’s massive noodle
industry, rather than being imported as a feed
substitute for maize.
Grain&feed millinG technoloGy July - august 2013 | 45
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Pellet quality and productivity
Calves, breeding cattle and lactating cows
have different nutritional requirements and
will need different feed formulations. Raw
materials have great effect on milk quality;
for instance, rapeseed dregs, worse slag, fish-
meal, and silkworm chrysalis powder should
be strictly limited. Otherwise, it may make
the milk with a peculiar smell. Conditioning
is a key factor in pelleting for starch pasting
and sterilization, improving the quality of
grain, grain hardness and durability including
material moisture content, retention time,
and the temperature.
Feed additives have an obvious effect on
improve milk yield and milk composition and
reduced milk production stress, but should
be strict control of the dosage.
Table 3 lists common additives for
dairy cows.
Conclusion
Since cattle eat primarily for-
age, cow pellets are a concen-
trate. Feeding pellets to dairy
cows gives the ability to package
minerals, buffers, rumen modifiers
and other ingredients required
in small quantities in a homog-
enous way. There is nothing inherently
special about cow feed pelleting technology
but particle size, mixing time, conditioning
degree, feed additives dosage should all be
considered.
Table 3: Common additives for dairy cows
Cow feed additives
Dosage (per
day)
Suitable growth
period
Anionic salts 200 g
Prenatal 3 weeks
(calves)
Bentonite 300-500 g Lactating dairy cow
Baking soda 110-225 g Lactating dairy cow
Magnesium oxide 50-90 g Lactating dairy cow
Isomeric acids 50-80 g Lactating dairy cow
Choline 30 g Lactating dairy cow
Monensin 50-200 mg
Dairy heifer, young
cows
Methionine
Hydroxy Analogue
30 g Lactating dairy cow
Niacin 6-12 g
Prenatal 2 weeks,
postnatal 16 weeks
Yeast culture 10-120 g
Prenatal 2 weeks,
postnatal 8 weeks
Biogen 10-50 g Lactating dairy cow
Zinc methionine 5 g Lactating dairy cow
Propylene glycol 0.25-0.5 kg
Prenatal 1 week,
postnatal 2 weeks
Table 2: Roughage and concentrated feed
Cow Feed Main Species Properties Nutrition Feeding Value
Roughage
Grass, hay,
crop straw,
alfalfa, chaff
species
Good
palatability,
easy
digestible,
large volume,
high water
content.
Rich in crude
protein,
carotene,
vitamin D,
inorganic salts
Low
Concentrate
Corn,
cottonseed
meal, wheat
bran, etc.
High quality,
low fibre,
easy to store
and transport
Abundant
in digestible
energy and
protein
High
More InforMatIon:
Email: info@pellet-machine.net
Website: www.pellet-machine.net
Grain&feed millinG technoloGy26 | July - august 2013

4. USDA has exports for the main three FSU
suppliers at 32m tonnes (25m last season).
This also assumes the Black Sea suppliers will
also attempt to rebuild their depleted stocks
as well as raise their own domestic feeding
of wheat.
Maize production in the Black Sea region is
also expected to expand, from 33m tonnes to
a post-Soviet-era record of almost 40m, again
allowing a big surge in export supplies. The lion’s
share of these will be coiming from the Ukraine
which has been already begun aggressively-
priced forward marketing of its crop to south
east Asian customers like South Korea.
But for maize, the key issue this month
remains the size of the US crop recovery
which will be largely defined by the weather
from late July onward. So far this has been
benign. While up to 2m or 3m acres of planned
area might not have been sown due to rain
delays – which also made for later germination
and development, the bulk of crop has had a
roaring start with plenty of moisture. A recent
warmup but without extreme heat and plenty
of forecast showers will be welcome for the
key pollination phase (which will be more or
less over by the time this issue hits the press).
Recent US maize crop estimates have
settled around the 350/355 tonne level – an
increase of 80m tonnes or 30 percent on last
year’s and, if it comes to pass, a new record
level. This will leave ample supplies for the
US to expand its corn consumption by the
25m tonnes predicted by USDA, raise its
contribution to world export supplies by over
15m tonnes and still have enough left over to
bump up next year’s carryover stocks from this
year’s wafer thin 18.5m tonnes to a hefty 50m.
Even without the above-mentioned increase
in Black Sea maize supplies, this is a pretty
bearish scenario – but that is by no means all
of the maize story.
Perhaps the biggest surprise
as we go to press has been a
steep upward revision for the
Argentine crop harvested last
spring, from 26m to 32.1m
tonnes – a new record and 50
percent up on the year. That
comes on top of a 77m tonne
(some say higher) Brazilian
harvest which is up by 4m
tonnes and also a second
consecutive record crop. These
are unprecedented quantities
of maize flowing out of Latin
America at prices that, like the
Ukrainian maize, will continue
to keep US exporters on their
toes for some time yet. This
may make it hard for the US
to attain its currently planned
revival in export to 33m
tonnes, resulting in it ending
up with even larger carryover
stocks next summer.
markets and a consequent drop in average
traded prices. On the leading bellwether
cereal markets of the USA, this is having less
impact so far because of the Chinese business
and because traders there want to see their
rebounding maize crop proved and ‘in the
bins’ – a situation still a month or two away as
this issue went to press. However, along with
Europe’s own crop rebound, the CIS recovery
is having quite an effect on EU cereal prices.
On the Paris MATIF milling and London feed
wheat futures markets, prices have already
collapsed to their lowest levels since early
last year.
Looking at the cheap prices for forward
deliveries being offered by Russia and Ukraine
across the board of cereals – wheat, maize and
barley – the European and global markets for
cereals seem likely to continue to point ‘south.’
Some recent bank surveys, not always noted
for their bearish attitude towards cereal prices
have been talking of a further 10 percent loss
for last half 2013.
A snapshot of the main components in
2013/14 cereal supply starts with the Black
Sea wheat crops, expected to rise by about
a third from last year’s drought reduced
level. The USDA is predicting almost 103m
tonnes (plus 25m tonnes) while some trade
estimates range from 4m to 9m tonnes lower.
The international wheat market has also
been enlivened by a surge in Brazilian buying
from countries like the USA as it seeks to
replace supplies that would normally have
come from its main source, Argentina, (where
wheat crops have been in decline in recent
years due to government interference in
export trade).
Barely into the new marketing year, the US
has already sold over 1.1m tonnes of milling
wheat to Brazil – 20 times as much as at this
time last year.
Between them, China and Brazil, now the
world’s second and third-largest wheat import
customers respectively, have caused a big
increase in US total wheat export sales for
the season to date – even at a time when the
US is pricing its wheat far too expensively to
compete in more traditional markets like the
Mid-East/North Africa region (MENA) and
non-Chinese South-east Asia. These two have
also helped replace business lost to former top
wheat buyer Egypt which has slashed wheat
imports this year due to financing difficulties
in the wake of its political upheavals.
As the trade had been expecting for many
months past, the advent of harvests across
the Black Sea region – weeks early than usual
in some cases – is leading to intense early
season selling pressure on global wheat export
Grain&feed millinG technoloGy46 | July - august 2013

5. COMMODITIES
an extra 47m tonnes, equal to around 38m
tonnes more meal. With increases in rapeseed
and sunflowerseed crops, the total oilseed gain
is closer to 51m tonnes. World consumption
of oilmeals in total over the same period is
only projected to grow by 12m, however. That
leaves a lot of the extra raw material supply
unaccounted for in terms of its disposal. A
lot of it will go to building stocks of oilseeds –
providing a good cushion prior to next year’s
crops. However, it could also be drawn on in
the interim if world crush/meal demand turns
out higher than expected and that should
put some restraint on protein prides going
forward.
The full impact of these supply increases has
only recently begun to be felt in the oilmeal
returning to their normal premium, they may
ultimately get dragged lower as maize prices
succumb further to the growing global crop
outlook for this grain. Wheat’s rally last year
was, after all, partly justified by the strength of
the maize market. We should also remember
that world wheat stocks are estimated at 24.6
percent of consumption needs whereas maize
stocks are equal to only 16 percent - so why
is wheat so relatively expensive?
Abundant supplies are also arriving on the
oilmeal/protein markets, thanks largely to
record large soyabean crops, complimented
by increases in rapeseed and sunflowerseed
supplies too.
Over the two marketing years from 2012/13
to 2013/14, world soya supplies have gained
The abundance of maize goes on. South
Africa’s crop is also a big one, up on last
year’s and currently vying for export trade
at cheaper prices than the US can offer.
Here in the European Union, meanwhile,
maize production has recently been revised
up from 63.9m to 65.6m tonnes. EU maize
consumption estimates have risen too this
month, from 67.8m to 70m, compared with
the past season’s 69m. However, EU imports
will clearly be able to drop from the mammoth
10m needed last year to offset tightness in
the cereal feeding sector (and in the process
enable the EU to export wheat freely and
exploit last year’s Black Sea crop shortfalls
and consequent higher world prices.
The relationship between maize and
wheat prices, especially in the feed sector,
remains a talking point this month. Using the
rough comparisons from the Chicago futures
markets, maize prices for November delivery
have now dropped to around $212 per tonne
from $290 in the spring and about $300 late
last year. Wheat on the other hand is quoting
closer to $250. While wheat has an intrinsic
higher value as a predominantly food crop
versus maize with its emphasis on feed/
industrial outlets, prices of the two grains ran
neck and neck for much of the past year, with
wheat often offered at a significant discount.
While wheat prices do now seem to be
Grain&feed millinG technoloGy July - august 2013 | 47
bin following a policy in which an employer
requiring employees to maintain a minimum
distance of six feet from the sweep auger.
In a September 29, 2008 Interpretation
Letter from OSHA responding to the insur-
ance agent’s request, OSHA explained that
1910.272(g)(1)(ii) governed this scenario,
and concluded that employees were pro-
hibited from being inside grain bins with
energized sweep augers unless the employer
could demonstrate that appropriate protec-
tions were in place to prevent exposure
to the hazards of the moving machinery.
OSHA offered two (not so helpful) meth-
ods by which employers could comply: (1)
completely guarding the auger (including the
flighting that contacts the grain); or (2) using
a rope position system (i.e., a human leash)
to prevent employee contact with energized
equipment. A policy requiring employees
to remain at least six feet from the sweep
auger, according to OSHA, was not an “oth-
erwise equally effective means or method”
to satisfy 1910.272(g)(1)(ii).
The insurance agent sent a second
request to OSHA for further clarification,
explaining that a sweep auger could not
be guarded on the front and still func-
tion, and that the rope positioning system
OSHA suggested would be “extremely dan-
gerous”. OSHA responded with another
Interpretation Letter on Christmas Eve of
2009 explicitly barring employees from being
Grain&feed millinG technoloGy July - august 2013 | 31
grain silos hoppered silos
Offices and Factory:
Ctra. de Arenas km. 2,300
13210 Villarta de San Juan • Ciudad Real- Spain
T: +34 926 640 475 • F: +34 926 640 294
Madrid Office:
C/ Azcona, 37 • 28028 Madrid - Spain
T: +34 91 726 43 04 • F: +34 91 361 15 94
www.symaga.com
symaga@symaga.com
FEATURE

6. • Earlier delays marketing record Latin
American crops means these will be
competing with the US later into second
half of trhe calendar year than usual.
• CIS countries are likely to remain cheap maize
suppliers as they seek to dispose of record
crops. However, big the US crop, its customers
will have more choice in the year ahead.
• Europe’s own maize crop rebound should
cut its import needs.
• US corn consumption for both feed and
ethanol is expected to increase in 2013/14
but its expected record crop should easily
accommodate that.
• Will China spring more surprises with its maize
import programme – a potentially bullish factor
for prices? At this stage, the demand foreseen
by most analysts from this buyer should be
easily absorbed by huge world supplies.
• Funds and other speculators have had a
lean time recently finding reasons to invest
in maize, other crop markets – indeed
commodities per se. Their absence as big
buyers this season will be welcomed by
consumers.
• Lookingfurtherdowntheroad,willLatinAmerica
maize producers sow smaller crops as prides
droponworldmarketsamidthecompetitionfor
markets?Sofar,theUSDAisexpectingArgentina
to keep expanding but Brazil to producer less
next year. Yet it is worth pointing out that the
performanceofboththesesuppliers(thesecond
and third biggest exporters) has been under-
rated in recent years .
OILMEALS/PROTEINS
• Will the US get a record soyabean crop this
year if recent favourable weather persists?
The potential is now there. And how will US
exports perform as delayed Latin American
marketings drag on into the late autumn/
early winter months?
• One big factor will be demand from the
world’s top soya importer China. USDA
expects to to import 69m tonnes – 10m
more than last season but Chinese officials
and some western trade analysts think the
figure will be closer to 64/68m tonnes.
China’s own crush is only expected to
grow by 3m tonnes and its economy is
slowing. Lower than expected Chinese
imports will more more soyabean stock
buildup in exporting countries. The global
soyabean stock is already expected to
jump from last year’s 61.5m to a record
74m tonnes.
• EU and CIS rapeseed and sunflowerseed and
Canadian canola crops - now appear to be
turning out larger than expected, pushing up
global oilseed supplies to a new record 493m
tones. That’s over 50m tonnes (11.6%) higher
thantwoyearsago.Globaloilmealconsumption
next season is forecast at 274m tones – up by
lessthan12mtonnesoverthetwoyearperiod.
Nowonderforwardmealmarketsarepointing
‘south.’
• Canadian, Australian and Argentine crops
are all expected to rise this season – by a
combined 8m tonnes, possibly more. These
are all quality bread-wheat producers who
will be able to keep world markets well
supplied with these grades. US spring wheat
is in very good condition too, another
important component of the quality wheat
market.
• India’s crop
might have been
over-rated by as
much as 5m to 7m
tonnes but it still
carries huge and
burdensomestocks.
Thesewillflowonto
world feed markets
if prices get frisky
again.
• Chinese wheat
impor ts have
surged and we may
not, by any means, yet have seen the end
of its purchasing programme for 2013/14.
This factor maintains the potential to excite
markets and stiffen prices from time to time.
• Middle Eastern/North African wheat
importers have been very active recently,
taking advantage of cheaper wheat prices
to keep their stocks topped up at a time of
huge political upheaval around the region.
Expect this trade to continue fairly brisk
but whether the world’s former top buyer
Egypt can recapture that role remains
questionable – a possible dampener on
bullish sentiment.
• A huge maize crop will keep wheat use in
feeds down below the peak level of two
years ago. But food and bio-fuel use will
add about 3 percent or 20m tonnes to
world total wheat consumption, matching
or exceeding by up to 10-20m tonnes the
projected global production forecast (this
currently ranges between 680m and 700m
tonnes). That means little or no stock growth
or even stock depletion. Nonetheless the
global wheat inventory remains large in
relation to consumption needs.
MAIZE
• Did the US manage to plant all its planned
(97.4m acres) area or will this fall perhaps
2m to 3m acres short of target after rain
delays to sowing? And will farmers get the
high national average yield of 156.5 bu/acree
yield expected by USDA? Our sources
expect some trimming of harvest area but
with mostly ideal conditions for pollination
(cool and damp) and some spells of warm
showery weather too, yields might well
offset that. Either way, it will be a very big
US crop. ‘Weather-risk premium’ is still built
into US maize prices. Expect more of this
to be whittled away as the crop starts to
arrive.
markets as the record South American crops
were harvested a bit later than usual and their
passage to market delayed by farmer and port-
worker strikes, keeping importer demand
directed toward dwindling US supplies.
However, with the US new crops now just
around the corner and the delayed South
American exports staggered much later into the
calendar year than usual, competition for buyers
is likely to be fierce in the weeks and months
ahead. We are already seeing this in forward
prices of soyabeans and meal, discounting spot
prices by as much as 15-20 percent. Some
sources see these coming down by a further
10 percent, 15 percent, even 20 percent as we
move into 2014. Whichever way the euro/dollar
exchange rate moves in the months ahead, this
looks promising for a period of cheaper costs
for European meal consumers.
KEY FACTORS AHEAD –
WHEAT
• Resurgent ‘Black Sea’ (former Soviet
country) crops may not be quite as big as
the most inflated estimates floating on the
market recently but they are now making
an impact on weaker wheat prices on
international markets. The price downtrend
is helping to constantly chip away at EU
wheat, barley and maize costs. Watch for
possible government intervention in Russia
and Ukraine to support prices and rebuild
depleted reserve stocks but we don’t
expect this to have more than temporary
stalling effect.
• Sunshine and warm weather came just
at the right time to jump start lagging
West European cereal crops and improve
quality potential. Yield estimates have
risen after the earlier abundant rains and
output nudging 140m tonnes (133m last
year) is more likely by the day. Europe has
already begun a another fairly aggressive
export campaign and – assuming again that
there will be plenty of backup from cheap
imported maize – may continue on this path
rather than rebuilding depleted EU stocks
(the past seasons EU maize imports hit a
modern record of 10.5m tonnes and at least
7m is expected to come in this season).
Grain&feed millinG technoloGy48 | July - august 2013

7. www.gfmt.co.uk
LINKS
• See the full issue
• Visit the GFMT website
• Contact the GFMT Team
• Subscribe to GFMT
A subscription magazine for the global flour & feed milling industries - first published in 1891
INCORPORATING PORTS, DISTRIBUTION AND FORMULATION
In this issue:
• Pig feed
pelletizing
technology
• Feed focus
Cattle
• Exploring
the challenge
of single
versus multi-
enzyme dosing
comparisons
July-August2013
• Improving
poultry health
and production
efficiency with
probiotics
• Aflatoxins in
Europe:
a new risk in maize
production?
• Sweeping
changes
to OSHA’s
sweep auger
enforcement
first published in 1891
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