global feed markets: january - february 2013

Digital Re-print - January | February 2013

Global Feed Markets: January - February 2013

www.gfmt.co.uk

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 2013 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

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 inf luence your decision-making.

Chicago soft red

winter wheat prices

have dropped by

about 8% since

our last review

after losing as

much as 12%

at one stage. In

Europe, soft milling

wheat futures

have dropped by

about 8-9% while

in export markets,

US quality hard

spring wheats are

down by about 9%

too. The smallest

declines have been

seen in US hard red

winter wheats amid

caution over the

poor condition of

the coming crop.

WITH most of 2012’s adverse supply developments now factored into prices, world grain and feed markets are now starting

to fix their sights more firmly on 2013/14 crop prospects. A recovery is certainly needed in 2013 cereal output. Latest estimates show world production this season is dropping by about 75m tonnes or just over 4% but consumption by only 37m tonnes or 2%, the balance coming off stocks.

While there have recently been some jitters about South American maize and soyabean crop weather, lower Argentine wheat quality, some winterkill threats in the former Soviet countries and a combination of drought and frost threats to a poorly rated US winter wheat crop, price rallies on the bellwether Chicago futures markets for both grains have largely struggled to hold up. That, in turn, has encouraged European cereal markets, to a large extent, to steer clear of further steep price increases too. In fact, if anything, the global grain and feed markets have maintained gradual downward bias since our last review, the major grains recently trading at their cheapest since last July.

Partly this trend has reflected less interest from speculative and other ‘outside’ money in the trend-setting US futures markets. Even the index funds or institutional investors, who have tended to stick with cereals through thick and thin in the hope of price rises have cashed in a large chunk of their wheat chips in recent weeks, preferring to ride

the remarkable recovery in US and other world stock markets instead.

That said, investors haven’t done badly out of wheat in 2012 which saw this grain close with a near 20% year-on-year gain in Chicago, albeit after trading as much as 45% up earlier in the year. EU milling wheat markets meanwhile closed the year about Δ50/tonne up (+25%), led by London feed-wheat plus £53 or 35%. Interestingly, the wheat markets across the Atlantic diverge completely on their forward views. EU 2013 crop wheat futures are cheaper than current old crop months whereas the US futures outlook shows higher distant prices.

In contrast, forward US futures continue to point to significantly cheaper prices for maize, for which current months have come out of 2012 with a gain of only 8% - quite a shift from last August when prices were up by over 30%.

Wheat and maize prices have also come under pressure from global export competition. Despite this year’s smaller Russian, Ukrainian and Kazakh crops, the Black Sea wheat exporters gave their rivals a good run for their money with an aggressive early season export campaign – as did the Argentines too from their own smaller wheat crop. Even the EU, with a significantly smaller 2012 wheat harvest, has been running a much more active wheat export campaign so far this season, clocking up a 35% year-on-year gain recently. That may lead to uncomfortably tight supplies here before the season closes in June but it has all helped keep exports from the main supplier, the USA, well

Will 2013 be a year of crop recovery?

Grain&feed millinG technoloGy44 | January - february 2013

COMMODITIES

behind their target level and, in turn, helped to keep wheat prices there and on world markets under control.

The same goes for the maize market where the past two months have seen unprecedented competition in terms of sales volume and pricing from record South American crops. Some of this is old crop business, some pre-selling of crops harvested from around Feb/Mar of this year onward. Even during an earlier spell of rain delays to Argentine planting and a more recent, rather worrying dry spell, the Latin American maize suppliers seem to have been happy to keep undercutting the US by $20 per tonne and

more to win all the notable business among the large Asian feed importing countries (with the exception of China, discussed under our coarse grain section below). .

Latest estimates from the USDA suggest these two Lat-Am exporters’ combined shipments of maize will reach a record 42m tonnes – over 60% more than the forecast for US expor ts (26m) which has been slashed repeatedly in recent months on the competition factor. It’s a remarkable challenge

to the once dominant global maize supplier which as recently as three or four years ago exported twice as much as its Latin American rivals.

US sales and thus world maize prices, are also being subdued by another relatively large Ukrainian crop, enabling 12.5m tonnes of exports. That may be down 2.6m from last season but it’s more twice the historical average shipped from this country. These ‘new’ supplies coming onto the world market

Grain&feed millinG technoloGy January - february 2013 | 45

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means longer uptime, lower operating costs, less expenses on maintenance and spares, and half the energy usage. This makes the whole unloading process more economical and environmentally sustainable, especially considering the added demurrage costs to vessels if a pneumatic system breaks down. Lastly, the Bargolink operates at lower noise levels and does not generate lower frequen-cies than pneumatic systems whose loud droning and changing volumes may consti-tute a health hazard.

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FEATURE

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COMMODITIES

behind their target level and, in turn, helped to keep wheat prices there and on world markets under control.

The same goes for the maize market where the past two months have seen unprecedented competition in terms of sales volume and pricing from record South American crops. Some of this is old crop business, some pre-selling of crops harvested from around Feb/Mar of this year onward. Even during an earlier spell of rain delays to Argentine planting and a more recent, rather worrying dry spell, the Latin American maize suppliers seem to have been happy to keep undercutting the US by $20 per tonne and

more to win all the notable business among the large Asian feed importing countries (with the exception of China, discussed under our coarse grain section below). .

Latest estimates from the USDA suggest these two Lat-Am exporters’ combined shipments of maize will reach a record 42m tonnes – over 60% more than the forecast for US expor ts (26m) which has been slashed repeatedly in recent months on the competition factor. It’s a remarkable challenge

to the once dominant global maize supplier which as recently as three or four years ago exported twice as much as its Latin American rivals.

US sales and thus world maize prices, are also being subdued by another relatively large Ukrainian crop, enabling 12.5m tonnes of exports. That may be down 2.6m from last season but it’s more twice the historical average shipped from this country. These ‘new’ supplies coming onto the world market


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GFMT13.01.indd 4 12/02/2013 16:10

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peak in the summer months. And, as noted in our last review, the forward futures markets suggest soya will be cheaper next autumn – if all the scheduled crop increases come through. So far, things are looking promising for South American supply to reach or even exceed targets. Crops there did go in late because of heavy rains but have avoided the withering droughts that decimated last year’s output in many areas and some is already being harvested in the early-planted areas of Northern Brazil. The US is meanwhile expected to bump up soya acreage again this spring. However, markets need to see that crop up and running under normal weather conditions before selling into it. There are also some uncertainties over other oilseed supplies after last year’s disappointing rapeseed and sunflowerseed crops in Canada, Europe and the former Soviet countries. Some revival is needed in these sectors too – especially in crops from Europe east and west, to help keep protein costs down.

Overall, the picture at this juncture is one of supplies improving and, with a few less global weather problems in coming months, perhaps some further decline in costs of the main grain and feed raw materials.

Main commodity devbelopments since our last reviewWheat prices down

Chicago soft red winter wheat prices have dropped by about 8% since our last review after losing as much as 12% at one stage. In Europe, soft milling wheat futures have dropped by about 8-9% while in export markets, US quality hard spring wheats are down by about 9% too. The smallest declines have been seen in US hard red winter wheats amid caution over the poor condition of the coming crop.

The firmest sector of the wheat market has been in former Soviet countries where this season’s smaller crops have been sold into export markets at an aggressive pace earlier in the season to capture the high world prices ruling then. Russia is now paying the price with record feedgrain costs and there has been talk of it needing to back-fill with imports, possibly from Europe – a development that could hoist prices here too, if it comes about. Russia is already taking some grain from neighbouring Kazakhstan, though, and along with a programme of intervention stock releases this may be enough to cool its internal market and avoid raiding the broader world market. In theory, it could buy US soft red winter wheat if it wanted to, cheaper than at any time since June.

Questions have been raised about the

Feed use of grain has been holding up better in the US than in Europe and the former Soviet countries and has recently been revised up by the USDA - which also cut US stocks accordingly, especially for maize. However, the initial bullish impact of this news proved short-lived as the Department also raised (rather than lowered, as the market expected) its final estimate of the US maize crop as well as increasing Latin American and other forecasts, resulting in a slightly larger global maize crop for 2012/13 than expected late last year.

On the negative side, the forecast for world maize consumption jumped too, largely due to the US adding 7.6m tonnes of usage for the full 2012/13 season (which ends August 31). That means US and world stocks will finish 2012/13 at very low levels in terms of consumption needs – about seven weeks of global supply compared with almost double that for wheat (and half of that tied up ‘off-market’ in China). So, regardless of those extra Latin American and Ukrainian supplies, a big US maize crop rebound is essential this summer to establish a more comfortable stock cushion against possible crop problems in the subsequent year..

In the protein sector, two opposing forces have continued to dominate the markets – record Chinese demand, centred on dwindling US soya supplies, versus expected record large Latin American soyabean crops.

Like the grains, soya prices also failed to hold all their stellar 2012 price gains, finishing the year with an 18.4% increase against a 49.7%

also beg the question of where all the extra production will go if the US does get the record crop farmers there are expected to plant this spring. The answer is that much of it will go to re-stocking, principally in the USA itseld. If that does happen, the discounts currently offered on new crop (latter 2013) US maize futures will have to get much bigger – a development that would help contain wheat prices too by reducing feed demand for fine grains.

Europe also needs to grow a bigger maize crop this summer after last year’s crashed by 11.5m tonnes to a multi-year low of under 55m – about 9m under projected EU consumption needs. Europe’s consequent huge import need – at least 8m tonnes – is one oif the few bright spots for global exporters in a season when world maize imports are seen tumbling from 103m to 97m tonnes.

Maize is also coming under some restraint from a weaker trend in the US corn ethanol market, home for 40% of its crop (and, of course, a large chunk of EU cereal production too). Although US ethanol output is just about matching USDA targets, production margins recently have been poor, often negative, and

are believed to have already idled about 20% of US capacity. The root cause is the still relatively high price of maize. In the boom years of the last decade, for example, when US capacity was rising regularly by as much as 20-30% a year – and before the ‘blend wall’ or renewable fuel mandate was approached – US maize was only $3.50 a bushel, half its current cost.


peak in the summer months. And, as noted in our last review, the forward futures markets suggest soya will be cheaper next autumn – if all the scheduled crop increases come through. So far, things are looking promising for South American supply to reach or even exceed targets. Crops there did go in late because of heavy rains but have avoided the withering droughts that decimated last year’s output in many areas and some is already being harvested in the early-planted areas of Northern Brazil. The US is meanwhile expected to bump up soya acreage again this spring. However, markets need to see that crop up and running under normal weather conditions before selling into it. There are also some uncertainties over other oilseed supplies after last year’s disappointing rapeseed and sunflowerseed crops in Canada, Europe and the former Soviet countries. Some revival is needed in these sectors too – especially in crops from Europe east and west, to help keep protein costs down.

Overall, the picture at this juncture is one of supplies improving and, with a few less global weather problems in coming months, perhaps some further decline in costs of the main grain and feed raw materials.

Main commodity devbelopments since our last reviewWheat prices down

Chicago soft red winter wheat prices have dropped by about 8% since our last review after losing as much as 12% at one stage. In Europe, soft milling wheat futures have dropped by about 8-9% while in export markets, US quality hard spring wheats are down by about 9% too. The smallest declines have been seen in US hard red winter wheats amid caution over the poor condition of the coming crop.

The firmest sector of the wheat market has been in former Soviet countries where this season’s smaller crops have been sold into export markets at an aggressive pace earlier in the season to capture the high world prices ruling then. Russia is now paying the price with record feedgrain costs and there has been talk of it needing to back-fill with imports, possibly from Europe – a development that could hoist prices here too, if it comes about. Russia is already taking some grain from neighbouring Kazakhstan, though, and along with a programme of intervention stock releases this may be enough to cool its internal market and avoid raiding the broader world market. In theory, it could buy US soft red winter wheat if it wanted to, cheaper than at any time since June.

Questions have been raised about the

Feed use of grain has been holding up better in the US than in Europe and the former Soviet countries and has recently been revised up by the USDA - which also cut US stocks accordingly, especially for maize. However, the initial bullish impact of this news proved short-lived as the Department also raised (rather than lowered, as the market expected) its final estimate of the US maize crop as well as increasing Latin American and other forecasts, resulting in a slightly larger global maize crop for 2012/13 than expected late last year.

On the negative side, the forecast for world maize consumption jumped too, largely due to the US adding 7.6m tonnes of usage for the full 2012/13 season (which ends August 31). That means US and world stocks will finish 2012/13 at very low levels in terms of consumption needs – about seven weeks of global supply compared with almost double that for wheat (and half of that tied up ‘off-market’ in China). So, regardless of those extra Latin American and Ukrainian supplies, a big US maize crop rebound is essential this summer to establish a more comfortable stock cushion against possible crop problems in the subsequent year..

In the protein sector, two opposing forces have continued to dominate the markets – record Chinese demand, centred on dwindling US soya supplies, versus expected record large Latin American soyabean crops.

Like the grains, soya prices also failed to hold all their stellar 2012 price gains, finishing the year with an 18.4% increase against a 49.7%

also beg the question of where all the extra production will go if the US does get the record crop farmers there are expected to plant this spring. The answer is that much of it will go to re-stocking, principally in the USA itseld. If that does happen, the discounts currently offered on new crop (latter 2013) US maize futures will have to get much bigger – a development that would help contain wheat prices too by reducing feed demand for fine grains.

Europe also needs to grow a bigger maize crop this summer after last year’s crashed by 11.5m tonnes to a multi-year low of under 55m – about 9m under projected EU consumption needs. Europe’s consequent huge import need – at least 8m tonnes – is one oif the few bright spots for global exporters in a season when world maize imports are seen tumbling from 103m to 97m tonnes.

Maize is also coming under some restraint from a weaker trend in the US corn ethanol market, home for 40% of its crop (and, of course, a large chunk of EU cereal production too). Although US ethanol output is just about matching USDA targets, production margins recently have been poor, often negative, and

are believed to have already idled about 20% of US capacity. The root cause is the still relatively high price of maize. In the boom years of the last decade, for example, when US capacity was rising regularly by as much as 20-30% a year – and before the ‘blend wall’ or renewable fuel mandate was approached – US maize was only $3.50 a bushel, half its current cost.


GFMT13.01.indd 15 12/02/2013 15:59

http://www.zhengchang.com

COMMODITIESput this down to cautionary stock-building of the main food staple. The question is whether that phase is completed or has further to run in the second half of the season. If it has run its course, markets may refocus on the fact that world import demand for wheat overall is still running about 8% down on the year, allowing global wheat prices to relax further. On the other hand, the Near East and others might see further price cuts as a good buying opportunity.

KEY FACTORS IN THE MONTHS AHEAD• How will US, European and Black Sea

crops emerge from a winter of challenging weather?

• Will the northern hemisphere have more ‘normal’ conditions this year?

• Wheat use in feeds may ease back if maize crops do rebound but in the meantime cheaper wheat prices could raise use in this sector

Maize supplies could surge in 2013

NEWS that the US had fed a lot more maize to its livestock from last year’s

from a smaller than expected crop. This is still a large one by historical comparison and the country has figured prominently in recent world export trade but what higher quality wheat Australia can offer has been commanding higher and higher premiums. Canada, which had a bigger exportable crop last year, has also been actively competing for global wheat import business. Farmers there intend to sow between 5% and 10% more this year, which will be welcomed for its usually higher quality, normal weather permitting.

Lastly, we should not forget India which has a seventh successive record crop predicted to arrive in March and needs to clear some of its record, poorly-stored stocks in export channels. Some think it could double sales to world market to around 9m tonnes (also a record). Port logistics might limit what it can sell pre-harvest and not everybody wants India’s lower quality – making it more of a factor for feedgrain (maize) markets. However, it is another bearish influence on prices.

Wheat prices will also be influenced in the months ahead by the level of import demand. This has quietened down a bit recently after a long spell of active buying, particularly from the Middle Eastern countries. Amid the political tension constantly breaking out across the region since the Arab Spring, some traders

extent to which world wheat output will recover in 2013. The International Grains Council ‘tentatively’ puts output 4% up – which would be around 682m tonnes. However, the worst-rated US hard red winter crop on modern record – albeit sown on a larger area – is a bit of a wild card in this pack. So is Russia’s crop in its main southern catchment areas for exports. In both regions there has been talk of either drought or winterkill clipping as much as 25% even 30% off production potential. However that would nowhere near equate to a national/regional trend. US soft red crops are doing very well and more spring wheat could be sown on abandoned acres. Ukraine’s crop is meanwhile in good shape, probably the best for years, suggesting a comeback in the second largest ‘Black Sea’ suppliers’ export role. Then there is Europe itself. Crops here have undoubtedly struggled in the UK and Northwest France from months of excessive wet, recent freezing and further rain and flooding. East European crops have also had some harsh weather with varying levels of snow protection. Will a very good outlook for German wheat and, hopefully, some better spring and summer weather redress the balance? Only time will tell. Among the other big players, Australia is said to have had some quality disappointments


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GMC_90x132mm.indd 1 16/10/2012 16:50

FEATURE

and the aleurone layer cells and therefore improves the energy value of the feed.

Reducing pathogenic bacteria in the colon

A third possible mechanism by which the nutritive value of feed is increased by feed enzymes is through the release of oligosac-charides (Choct and Cadogan, 2001). These can be formed during the degradation of storage and cell wall carbohydrates by sup-plemental enzymes and are able to resist further degradation by digestive enzymes and so able to reach the colon. Once in the colon these oligosaccharides are a nutri-ent source for beneficial bacteria such as Bifidobacterium and Lactobacillus spp which suppress the growth of pathogenic bacteria such as Salmonella, Clostridium, Campylobacter and Escherichia coli. It is well established that reducing pathogenic bacteria in the colon improves weight gain and the feed conver-sion ratio in pigs and poultry.

Cost saving feed formulationRegardless of the mechanism by which

the energy value of feed is increased, the fact that it occurs is of significant importance for producers and nutritionists. This allows for greater flexibility when formulating diets meaning that alternative feed ingredients, which are traditionally of lower nutritive value, can be utilised in the formulation. This can result in significant savings in feed costs for producers where, for example, some of the wheat-based portion of the diet can be replaced with cheaper barley, providing a suitable blend beta-glucanase and xylanase enzymes are incorporated into the diet.

Phytase developmentThe 1990s saw the development of the

next enzyme of significant importance in ani-mal nutrition, phytase. Phosphorous is a very important and valuable mineral element in all species as it is crucial for bone development and metabolic processes.

In plants, the majority of phosphorous is stored in the form of phytate. Monogastrics are unable to utilise the phosphorous in phytate so it is a major source of an important nutrient that is normally wasted. Instead, producers have to supplement diets with inorganic phosphorous supplements although dependence on inorganic phos-phorous supplements is a challenge because global reserves of rock phosphate are not renewable and the price has escalated. Furthermore, producers have a tendency to over-supplement with inorganic phos-phorous with the result that most of it is excreted by the animal and becomes a major environmental pollutant.

Phytase benefitsWhen the development of phytase

enzymes began it was largely to reduce the requirements for inorganic phospho-rous thus saving money for producers and

reducing the envi-ronmental impact. However, it has become apparent that further nutri-tional benefits are achieved because phytate has the capacity to bind other important minerals such as calcium, zinc, manganese, iron and copper thus reducing their bioavailability in the digestive tract.

Additional research has also revealed that the inclusion of phytase can improve both ileal amino acid digestibility and dietary avail-able metabolisable energy (Ravindran et al 2001). Phytate is therefore con-sidered as both an indigestible nutri-ent and an anti-nutrient and inter-estingly, in the last decade, research has demonstrated that administering unconvention-ally high doses or by ‘superdosing’ phytase in diets that animal perform-ance can be sub-stantially improved (Cowieson et al 2011).

Challenges associated with enzymes use

One of the major challenges with the cur-rent use of feed enzymes is that producers face dif-ficult decisions on which varieties to use and at what inclusion rates. Aside from the diet formulation and the ingredi-ents used, there are a number of factors that can affect the efficacy of feed enzymes.


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FEATURE

GFMT13.01.indd 2 12/02/2013 15:56

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COMMODITIESput this down to cautionary stock-building of the main food staple. The question is whether that phase is completed or has further to run in the second half of the season. If it has run its course, markets may refocus on the fact that world import demand for wheat overall is still running about 8% down on the year, allowing global wheat prices to relax further. On the other hand, the Near East and others might see further price cuts as a good buying opportunity.

KEY FACTORS IN THE MONTHS AHEAD• How will US, European and Black Sea

crops emerge from a winter of challenging weather?

• Will the northern hemisphere have more ‘normal’ conditions this year?

• Wheat use in feeds may ease back if maize crops do rebound but in the meantime cheaper wheat prices could raise use in this sector

Maize supplies could surge in 2013

NEWS that the US had fed a lot more maize to its livestock from last year’s

from a smaller than expected crop. This is still a large one by historical comparison and the country has figured prominently in recent world export trade but what higher quality wheat Australia can offer has been commanding higher and higher premiums. Canada, which had a bigger exportable crop last year, has also been actively competing for global wheat import business. Farmers there intend to sow between 5% and 10% more this year, which will be welcomed for its usually higher quality, normal weather permitting.

Lastly, we should not forget India which has a seventh successive record crop predicted to arrive in March and needs to clear some of its record, poorly-stored stocks in export channels. Some think it could double sales to world market to around 9m tonnes (also a record). Port logistics might limit what it can sell pre-harvest and not everybody wants India’s lower quality – making it more of a factor for feedgrain (maize) markets. However, it is another bearish influence on prices.

Wheat prices will also be influenced in the months ahead by the level of import demand. This has quietened down a bit recently after a long spell of active buying, particularly from the Middle Eastern countries. Amid the political tension constantly breaking out across the region since the Arab Spring, some traders

extent to which world wheat output will recover in 2013. The International Grains Council ‘tentatively’ puts output 4% up – which would be around 682m tonnes. However, the worst-rated US hard red winter crop on modern record – albeit sown on a larger area – is a bit of a wild card in this pack. So is Russia’s crop in its main southern catchment areas for exports. In both regions there has been talk of either drought or winterkill clipping as much as 25% even 30% off production potential. However that would nowhere near equate to a national/regional trend. US soft red crops are doing very well and more spring wheat could be sown on abandoned acres. Ukraine’s crop is meanwhile in good shape, probably the best for years, suggesting a comeback in the second largest ‘Black Sea’ suppliers’ export role. Then there is Europe itself. Crops here have undoubtedly struggled in the UK and Northwest France from months of excessive wet, recent freezing and further rain and flooding. East European crops have also had some harsh weather with varying levels of snow protection. Will a very good outlook for German wheat and, hopefully, some better spring and summer weather redress the balance? Only time will tell. Among the other big players, Australia is said to have had some quality disappointments


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This will be none too soon for the US market which has been selling its supplies out far too fas t for comfor t , chief ly feeding record f irst-half-season demand from top buyer China. Although some of these advance bookings (ranging into 2013.14 now) could be washed out and switched to South American, the US is likely to star t next season with very small stocks. That will make markets sensitive over the coming months to any US weather problems, before, during and well af ter sowing the crop around April /May. If all goes well, the US should fur ther boost 2013 supplies and help keep prices moving lower.

Protein users have become increasingly dependent on soya in this season of disappointing rapeseed and sunf lowerseed production. Apart from a little extra feeding of palm kernel and groundnut meal, almost all the increase in this season’s oilmeal consumption will be fed by soyabean products. At this stage, there are no f irm pointers to alternative oilmeals making a much bigger contr ibution in 2013/14 but we still have to see how Canadian rapeseed, EU and former Soviet countries’ spring rape and sunf lower plantings pan out. So far this lack of substitutes has helped keep soya prices relatively f irm. Despite dipping by around 7% at one stage since our last review, the Chicago market has recently recouped most of its losses. However, if the US gets the 90m tonne crop some expect in 2013, prices should come down more emphatically.

KEY FACTORS IN THE MONTHS AHEAD • South American crop weather during the

remainder of the growing/harvest period• The timing of importers’ switch to Lat-Am

from US supplies• US spring planting decisions – and

accompanying weather• Chinese demand for soya meal • EU/CIS rapeseed & sunflowerseed and

Canadian canola plantings and weather

KEY FACTORS IN THE MONTHS AHEAD• US 2013 crop maize planting area and

growing weather will determine whether US and global stocks of the grain return to more ‘normal’ levels

• How long will export competition from Latin America, former Soviet countries and India contiunue intoi second quarter 2013? The South American crops look promising but need more rain as we go to press

• Will US corn ethanol use revive after an unusual decline in 2012?

• Chinese demand for maize has grown 37% in just four years – can its crop keep up or will they raid the world market for larger volumes?

• Speculators’ enthusiasm to buy into any crop weather problems

Proteins/oilmeals - demand to mop up extra soya?

SOYA supplies are still improving. The f inal US harvest e s t ima te ha s been rev i sed up by more than expected w h i l e S ou t h American crops are looking closer to attaining the record 144.25m (plus 33.25m) forecast by the U S DA . T h e total increase in world output equa l s abou t

26m tonnes more meal whereas global consumption is only expected to increase by about 5.2m. Although there have been some dry weather jitters recently, the Lat-Am crops are now entering the home run and some are already starting harvest so, barring an extended dry spell or some last minute harvest weather problems, soya demand should be making its annual shift to the southern hemisphere suppliers shortly.

disappointingly small crop gave prices a lift in January. Earlier, the Chicago futures market had been down as much as 10% from its early December highs. The USDA raised its US feeding number by 7.6m tonnes to 113m. However, it also cut US exports by 5m tonnes and raised the 2012 f inal crop estimate by 1.4m, limiting the impact on US ending stocks to a more manageable 1.1m tonne decline. Given that US exports are still running well behind the target pace, it’s possible that f igure could go lower still, freeing up a little more ending stock. On the plus side for supplies, USDA raised combined South American production by 1.5m tonnes and the region’s exports by 3.5m. With increments to other, smaller producers, world corn output actually increased last month to 852.3m from 849.1m tonnes. Nonetheless, world ending stocks have tightened further still.

On the restraining side, as mentioned above, competition for US maize on world markets is keeping a lid on prices. This is coming not only from South American and east European maize exports but from still relatively cheap feed wheat, including Indian and even some South American and is expected to continue into second quarter 2013.

Despite USDA’s upward revision, US feed use of maize, also taking about 40% of production, will still be about 2m tonnes lower than last year’s and about 9m less than in 2010/11. However, US ethanol use is forecast about 10% down this season and may fall further still if profitability fails to stem the current spate of plant shutdowns and slowdowns. All of this could spell slightly larger stocks to start the new US season on September 1.

World barley production also fell to a multi-year low this season at just under 130m tonnes and with consumption running closer to 133m, ending stocks will fall to a multi-year low of under 20m tonnes. Stocks will be par ticularly low within the EU by end-June – 3.6m tonne compared with 15.6m just three years ago so there is not much leeway if anything goes wrong with the next crop.


This will be none too soon for the US market which has been selling its supplies out far too fas t for comfor t , chief ly feeding record f irst-half-season demand from top buyer China. Although some of these advance bookings (ranging into 2013.14 now) could be washed out and switched to South American, the US is likely to star t next season with very small stocks. That will make markets sensitive over the coming months to any US weather problems, before, during and well af ter sowing the crop around April /May. If all goes well, the US should fur ther boost 2013 supplies and help keep prices moving lower.

Protein users have become increasingly dependent on soya in this season of disappointing rapeseed and sunf lowerseed production. Apart from a little extra feeding of palm kernel and groundnut meal, almost all the increase in this season’s oilmeal consumption will be fed by soyabean products. At this stage, there are no f irm pointers to alternative oilmeals making a much bigger contr ibution in 2013/14 but we still have to see how Canadian rapeseed, EU and former Soviet countries’ spring rape and sunf lower plantings pan out. So far this lack of substitutes has helped keep soya prices relatively f irm. Despite dipping by around 7% at one stage since our last review, the Chicago market has recently recouped most of its losses. However, if the US gets the 90m tonne crop some expect in 2013, prices should come down more emphatically.

KEY FACTORS IN THE MONTHS AHEAD • South American crop weather during the

remainder of the growing/harvest period• The timing of importers’ switch to Lat-Am

from US supplies• US spring planting decisions – and

accompanying weather• Chinese demand for soya meal • EU/CIS rapeseed & sunflowerseed and

Canadian canola plantings and weather

KEY FACTORS IN THE MONTHS AHEAD• US 2013 crop maize planting area and

growing weather will determine whether US and global stocks of the grain return to more ‘normal’ levels

• How long will export competition from Latin America, former Soviet countries and India contiunue intoi second quarter 2013? The South American crops look promising but need more rain as we go to press

• Will US corn ethanol use revive after an unusual decline in 2012?

• Chinese demand for maize has grown 37% in just four years – can its crop keep up or will they raid the world market for larger volumes?

• Speculators’ enthusiasm to buy into any crop weather problems

Proteins/oilmeals - demand to mop up extra soya?

SOYA supplies are still improving. The f inal US harvest e s t ima te ha s been rev i sed up by more than expected w h i l e S ou t h American crops are looking closer to attaining the record 144.25m (plus 33.25m) forecast by the U S DA . T h e total increase in world output equa l s abou t

26m tonnes more meal whereas global consumption is only expected to increase by about 5.2m. Although there have been some dry weather jitters recently, the Lat-Am crops are now entering the home run and some are already starting harvest so, barring an extended dry spell or some last minute harvest weather problems, soya demand should be making its annual shift to the southern hemisphere suppliers shortly.

disappointingly small crop gave prices a lift in January. Earlier, the Chicago futures market had been down as much as 10% from its early December highs. The USDA raised its US feeding number by 7.6m tonnes to 113m. However, it also cut US exports by 5m tonnes and raised the 2012 f inal crop estimate by 1.4m, limiting the impact on US ending stocks to a more manageable 1.1m tonne decline. Given that US exports are still running well behind the target pace, it’s possible that f igure could go lower still, freeing up a little more ending stock. On the plus side for supplies, USDA raised combined South American production by 1.5m tonnes and the region’s exports by 3.5m. With increments to other, smaller producers, world corn output actually increased last month to 852.3m from 849.1m tonnes. Nonetheless, world ending stocks have tightened further still.

On the restraining side, as mentioned above, competition for US maize on world markets is keeping a lid on prices. This is coming not only from South American and east European maize exports but from still relatively cheap feed wheat, including Indian and even some South American and is expected to continue into second quarter 2013.

Despite USDA’s upward revision, US feed use of maize, also taking about 40% of production, will still be about 2m tonnes lower than last year’s and about 9m less than in 2010/11. However, US ethanol use is forecast about 10% down this season and may fall further still if profitability fails to stem the current spate of plant shutdowns and slowdowns. All of this could spell slightly larger stocks to start the new US season on September 1.

World barley production also fell to a multi-year low this season at just under 130m tonnes and with consumption running closer to 133m, ending stocks will fall to a multi-year low of under 20m tonnes. Stocks will be par ticularly low within the EU by end-June – 3.6m tonne compared with 15.6m just three years ago so there is not much leeway if anything goes wrong with the next crop.

Grain&feed millinG technoloGy48 | January - february 2013 Grain&feed millinG technoloGy January - february 2013 | 49

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the product is not efficient. (data from Dr. Morgane Henry, Hellenic Center for marine Research , 2011)

YCW products, depending on the quality of the autolysed yeast separation, contain also significant percentages of proteins and lipids. It should be noted that the lower the level of proteins, the higher of level of carbo-hydrates, and then the better immunostimu-lation from the YCW is. Various quality of YCW are on the animal production market and major differences can be found between products depending on the strain, the sub-strate used to produce the yeast, and event the drying process.

Mannans represent as most 25-27 per-cent of YCW in good quality YCW from primary grown yeasts, but can be found as low as 9 percent in crude preparation coming from industry by-products. Glucans or poly-glucose can range from 18 To 40 percent. YCW Protein level remains the most convenient indicator of quality, the best products being those having lower nitrogen content. The variability between batches can also be very high. Texture should be checked first. Good YCW often have a smooth, fine texture, low granu-lometry and a light beige colour. There is also the tendency to believe that all YCW are the same and that differentiation of products must be done to the highest level of glucans (sometimes measured as both

alpha and beta forms)or mannans. Not all the YCW are equal. Efficiency should be checked as a prerequisite to use, or change, YCW.

At LFA we have conducted a survey of four YCW (2 bakery and 2 brewery yeasts) produced in 4 of our own facto-ries in the same L. Anguillarum challenge in sea bass supplemented at 0.5 g/kg of feed for 8 weeks. Only 2 responded significantly (1 bakery, 1 brewery), the remaining 2 had even negative results at 4 weeks (lower survival than control). This result shows first that not all is under-stood in the way these products work and that one particular YCW cannot be replaced by another.

Selenium yeastYeast can be induced to be a source

of organic selenium, mainly under the form of seleniomethionine, which is then stored in proteins. During the growth of baker’s yeast, selenium is added to the medium and is replacing sulphur in methionine. The excess of selenium is then eliminated by careful washing steps (see Figure 5) to ensure that the selenium left is 97-99 percent organic. Selenium yeast should be then checked for the highest percentage of selenomethionine and the consistency between batches. Seleniomethionine is the main carbon-

associated form of selenium in the ani-mal’s body and then allow making organic selenium which are readily available when oxidative stress reactions occur.

The main application would be in aqua-culture as fish meal is a main supply of selenium and the development of diets with less fish meal will require compensation of selenium in aquafeed formulae. Such an application could be useful in preventing the oxidation of poly unsaturated fatty acids (PUFA) in fish flesh. Chromium yeast is seldom used in aquaculture diets.

Conclusion Yeast products are getting more fre-

quently used in aquaculture. Some appli-cations are promising as the use as an alternative source of proteins or as a sanitary and welfare enhancer. However many products ranging from crude ethanol yeast by-products to more purified beta-glucans are available on the market. Therefore potential users must accurately select them in function of their targeted application. It is also as important to select a reliable source of the products to ensure a consistency of the supply and the quality.

More InforMatIon:Website: www.yeast-science.com


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