Price Trends - Trouw Nutrition Indonesia

MARCH 2014
Price Trends
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New directions towards
Q2 2014
If you look at the the USDA reports in February 2014, the reports
keeps its grain forecasts largely unchanged, but gives a bearish
signal to oilseed markets. However, the rapid response due to the
granting of EU wheat export licences which has kept European
wheat prices at large premiums to US values. This looks set to
keep EU wheat stocks fragile.
The new direction has also arrived on the vegetable oil market
which will most likely be a lightly downward. Palm market is
expected to tend further down together with soy oil and diesel
prices. This to keep attracting the necessary additional demand.
With this information we shares our goals to enable customers
to purchase sustainable nutritional solutions, we continued to
engage with our partners in the feed-to-food value chain to
establish, control and manage systems for sourcing sustainable
raw materials in a responsible way.
In this issue of our Trouw Price Trends information (previously
TopPost), we are pleased to keep sharing the latest updates on
the world grain market as well as raw materials information
with you, our prestigious customers.
We wish you a strong end of Q1 and have great new directions
towards Q2. Together we will have stronger partnership in
exchanging information to keep our industry growing and
have more sustainable future.
Sincerely,
Nabil Chinniah
Procurement Lead Asia-Pacific
Trouw Nutrition International
Nabil Chinniah
Procurement Lead Asia-Pacific
Trouw Nutrition International
Contents
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4
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Grains, Vegetable Oils & Proteins
Marine Products
Dairy
Amino Acids
Vitamins
Minerals and Trace Elements
Trouw Price Trends | March 2014
GRAINS
VEGETABLE OILS
& PROTEINS
GRAINS
In the February USDA report by the US Ministry of
Agriculture and worldwide acknowledged as indicator
for global crops showed a firm adjustment downward
for wheat stocks both in the USA and Europe.
However the available carryover stocks to the new
crop year remain healthy and in much better shape
than previous years.
Global wheat output was lowered en the usage slightly
increased resulting in stock decrease of 1,6 Mio MT.
For corn the deciding usage by China was kept
unchanged ast 216 Mio MT in spite signals or rumors
on lower consumption. Corn carry out stocks were
lowered by close to 3 Mio MT but still are at the highest
point in 13 years.
VEGETABLE OILS
PALM OIL
Stocks: 1.98mil vs 1.99 mil tones DEC (-0.3%)
Production: 1.50mil vs 1.67 mil tones DEC (-8.8%)
Exports: 1.35mil vs 1.51 mil tones in DEC (-10.5%)
S&D expectations Malaysia 20/02
Export decreasing by approx. 5%. Production decrease
at >10%. Further decrease of stock at end of Feb. is
likely, supporting market on short term.
Rival soy oil has lead the market upwards. Palm was
able to follow. Buyers are covered very short, making it
for sellers easy to ask for high prices in current market
environment. Potentially market can increase another
US$50 in the coming eight weeks.
Market expectation in the next 3- 6 months
Market Range back in 2450-2650. Fundamentally
market would be testing the lower range due to S&D
figures, and due to competition from other veg oil (soy)
will have effect on the market price. New direction
will most likely be a lightly downward. Palm market
is expected to tend further down together with soy oil
and diesel prices. This to keep attracting the necessary
additional demand. Today soy oil at same price as
palm oil.
CPO
Cover March and April at current prices. If prices
decrease beneath MYR 2400 one might cover some
future months. Prices beneath MYR 2300 considered
to be attractive for long position.
RSO
Market is looking at soy market and corrected
accordingly. Due to higher intake from biodiesel on
palm or soy blend, less RSO has been used. High
output from Canola in Canada and EU soft weather
conditions gives positive on output predictions. In the
long term (Canada aims for higher output. Where
expectations coming in 12 years from 18 Mln MT
2013 to 26 Mln MT 2025). Weak crude or gas oil will
put pressure on RSO as well.
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Trouw Price Trends | March 2014
Palm oil export market
are decreasing by
approx. 5% and
production decrease
at >10%.
Global output at
record high levels
(288 Mio MT).
Weak crude or gas oil
will put pressure on
RSO.
PKO
CNO
PKO discount of approx. US$ 50 per MT to CNO. This
is too tight. US$100 per MT is needed to keep the
PKO more attractive than CNO. CNO has to loose
demand and will increase further. Stocks slightly
increasing. Excellent crush margins for PKO will
have positive effect on Supply, although production
is moving to low cycle. PKO will follow CNO where
possible. Due to bad weather conditions in the origin,
consistent supply is threatened for CNO. Possibility of
‘’hole’’ in supply chain is big threat. Switching from
CNO to PKO still very limited.
Stay away from the short. Cover at least 3 months
ahead. This is to prevent from product tightness in
destination. Keep in mind, in the first months the CNO
was already shipped before to the typhoon. Now new
deliveries should arrive. This can interrupt availability.
VEGETABLE PROTEINS
SOY
The USDA report publication for February showed
global output at record high levels (288 Mio MT).
Especially Brazil seems to head for a historic crop
around 90 Mio MT (surpassing the USA). Overall
carry out stocks were predicted at 73 Mio MT which
seems comfortable.
However first the new crops from South America need
to be realized and physically reach consumer markets.
Coming weeks therefore full focus on the transfer from
US old to SA new crops. Prices have been affirmed due
to this reason.
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Trouw Price Trends | March 2014
MARINE
PRODUCTS
STILL SLOW FISHERY AND PRODUCTION OF
FISHMEAL AND OIL IN SCANDINAVIA.
As informed the fishery of capelin and blue waiting
behind last years and this year expectation.Norway has
still not agreed with EU about quota’s in Norwegian and
EU sone.Prices are up! Secure volumes at least until meal
and oil from new fishing season in Peru arrive in Europe.
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Trouw Price Trends | March 2014
DAIRY
PRODUCTS
LIQUID MARKET DEVELOPMENT
Still very much milk in EU and a combination of
problems in certain factories and a lot more milk is
causing a lot of pressure on the liquid market. Liquid
whey and skimmed milk concentrate is offered at
levels well below powder prices and we expect that
this situation will continue for the next 7 weeks, of
course depending on a lot of circumstances which we
can’t influence, like good weather circumstances in
(some parts) EU.
POWDER MARKET DEVELOPMENT
Milk production in EU is much higher compared to
2013. International demand is still strong. Producers
are struggling to find capacity to process all the milk
and the peak in milk production still needs to come.
Global SMP food prices are still around €3,350 or
€3400. Feed prices already at level €3,000, which is
very strange.
If food prices are staying at current levels, we won’t
have to expect that feed SMP is going down further.
From a historical point of view SMP prices are still high.
Sweet whey powder prices are moving already for a
long period between €980 and €1,050. Producers
doesn’t have stocks and they export a lot towards Asia
and China. So prices will stay around current levels of
€980 or 990 that will be delivered for feed.
Milk production in the
EU is still much higher
as previous year.
GENERAL MARKET DEVELOPMENT
Although everybody expects that we have seen the
end of global financial crisis, there are still a lot of
things very uncertain.
Will USA be able to reduce the support to the economy
without problems? Will certain EU countries be able
to survive without help of Brussels (Greece, Portugal,
Spain?) Will global demand stay firm with current high
dairy prices? Will USD/EURO exchange rate remains
at current levels?
Taking into account that it is very difficult to give an
answer on these questions.
Producers are
struggling to find
capacity to process all
the milk
Will USD/EURO
exchange rate
remains at current
levels?
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Trouw Price Trends | March 2014
AMINO ACIDS
QUITE MARKETS AND NOT MUCH CHANGES
FROM LAST REPORT.
LYSINE MARKET
The global market remains in an oversupply situation and
driving prices to the bottom not seen for 6 years. Producers
have lately reacted and reducing their output. Producers
have now increased their prices slightly with a few cents.
Lysine quite with Chinese New Year and holiday, where
N-AM market is weaker again with CJ new production
facility to capture market share in N-AM. Demand for
amino acids remains very good with current spread on soy
vs corn or wheat. Price differences per region are small.
Price range for Lysine HCL 1,35-1,55 USD$/kg.
METHIONINE MARKET
Adisseo production disruption did not improve as quickly
as expected and will also impact This is only for DLMethionine, the Spanish factory for liquid MHA had enough
stock build up before Christmas. For Q1 the market prices
in EU and Asia where most effected and increased by at
least 10 ct or higher for uncover volumes. The production
stop with Unisplendour in China remains unchanged due to
environmental reasons, nevertheless they keep expanding
their capacity by building a new factory in Ningxia. Adisseo
is on track with its new production facility and started the
first startup production, by importing the raw materials from
their French facilities. DL-Methionine market in Europe is
getting tight as Adisseo is not back at full production in
France. Addition volumes hard to find, with spot market
moving in the range of 2,85-3,00 €/kg.
THREONINE MARKET
MeiHua with maintenance, Eppen new factory delayed
in startup and CJ production in China affected by
contamination. The overcapacity will put a cap on too high
prices. Especially Europe is more than enough covered with
Chinese Threonine for Q1. However prices increased lately
from reduced output and producers asking higher prices, it
remains to be seen how strong this is over the next months
as slow demand is expected in China after Chinese new
year. N-AM prices are stable but on higher level. More
imports seen here as well. AT the moment the market is
moving >1,80 USD$/kg.
TRYPTOPHAN MARKET
European demand is increasing for Europe and especially
in USA. Therefor Ajinomoto decided to allocate more
volume outside EU, where also prices are much better for
Tryptophan. CJ realize that their volumes are easily booked
in Europe on Q1 and therefor decided to stop offering and
NOT accepting any new contracts in Q1 also supported
by additional sales in USA). Evonik was already out of EU
or at higher price level. Price in EU is > 14 €/kg for spot
business. With current price level < 15 USD$/kg (12 €/kg)
it is attractive to keep Tryptophan in grower and finishing
diets for pigs. Both CJ and Ajinomoto have no intention to
increase prices above 13 €/kg, also this would attract the
Chinese producers to start up production again.
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Trouw Price Trends | March 2014
VITAMINS
VITAMIN E
VITAMIN A
Prices have stabilized and the market is in anticipation
what will happen moving towards Q2. The question is: will
the Western producers persist in their attempt in playing a
leading role pushing the prices up. The second question:
will the Chinese now follow? The answer to the first
question will be probably NO. We see BASF offering prices
in the US market below USD 10.00. In the EU BASF was not
very active as they claimed (one week ago) not to sell (and
also not will sell) below €8.00. But BASF also mentioned
that they cannot afford themselves not to be present in the
market for another quarter.
Vitamin A is very scarce especially in North America. Output
is limited and price move up sharply as we speak. It is not
expected that this price increase will stop
Now BASF has obviously changed the plan: today we have
received a quote significantly below the below the €8.00.
It is likely that DSM will also fall back. This leads to the
conclusion that the market will further decrease in Q2
and also that there is no market leader who can guide the
market towards an accepted price increase.
Prices have stabilized
and the market is
in anticipation what
will happen moving
towards Q2.
CALPAN
Market is now at USD 18.00 and moving towards the USD
20.00 as the two mayor suppliers - Xinfa and Xinfu - have
the ambition to push the price further up.
FOLIC
Producers are forced to limit their output due to pollution.
Prices are at around USD 28.00. Three producers indicate
that they will push the price further up targeting USD 35.00
VITAMIN D3
D3 is still moving down although the biggest decrease is in
the past. Price is expected to be USD 9.00.
Vitamin A is very
scarce especially in
North America.
Producers are forced
to limit their output
due to pollution.
$
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Trouw Price Trends | March 2014
MINERALS &
TRACE
ELEMENTS
Phosphate fertilizer demand remains strong and prices
have increased by up to 40% since the bottom in late 2013
though are more stable over the past 2 weeks. Phosphoric
acid is following the upward trend with contracts for Q1 up
by $40-70/ton. Though feed prices are currently stable with
Q1 already covered the fundamentals continue to suggest
Q2 will be up in all regions as suppliers use this as a reason
for increasing. In reality producers have been increasing
their profitability by not passing decreases as Phos Acid
came down especially during 2013. No firm offers in EU
yet but we expect €15-30/tonne. Suppliers already indicate
$0-25 higher in US and Canada. We expect EU suppliers
to use the sale of Tessenderlo to Ecophos and Ercros to
Timab as further argumentation why prices will increase
due to risk of shortage of supply though in reality we do not
see the actual risk as high despite some current short term
production issues at Tessenderlo.
Copper metal has weakened slightly since the previous
report due to a more bearish sentiment. Copper Sulphate
prices remain stable/weak with potential disruption due to
production issues at one of the Russian producers being
mentioned but not yet confirmed. Copper Sulphate pricing
remains stable/slightly weak though the market is fairly
quiet with Q2 contracting still to start in earnest.
Zinc oxide prices are stable/up especially in EU where some
suppliers are sold out and others asking 5-10% higher
prices or restricting volumes offered for Q2. As with copper
the market is quiet with most Q2 contracting still to begin
– whether the current firmer prices will remain or slip back
will become clear in the next 2 weeks but on balance we see
more upside potential.
Adopted from various sources
TROUW PRICE TRENDS brought to you by:
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MM 2100 Industrial Town • Jl. Selayar Blok A 3-2
Cikarang Barat • Bekasi, 17845 • Indonesia
Phone: +62 21 89983325 • Fax: +62 21 8998 3326
www.trouwnutrition.co.id • www.nutreco.com
TPT010/NL/170314/AP
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