US FEED GRAINS and VEGETABLE AND ANIMAL PROTEIN

Well, the news at the end of the week is that the US Government shutdown is over, for at least three weeks, it will be great to once again get all the USDA services and reports that we count on every day. Let's hope that the three weeks extends into a 100% end to the shutdown.

Looking at the week, except for soybeans, market prices were very quiet at the end of the week with corn and wheat prices up by perhaps USD 1 m/t, which really counts as nothing. Soybeans were up by about USD 3.50 m/t, also not considered to be anything significant.

Much of the small increase in soybeans this week was related to the continuing lack of good rainfall in parts of Brazil – there has been some rain but not as widespread as people would like. There will also be a Chinese delegation in Washington on Monday to talk trade problems – will we see an end to the USA/China sanctions – one day but certainly not on Monday.

Farm Futures published their survey of planting intentions for 2019 – everyone read it in great detail since there is nothing to read from the USDA. Their survey shows that corn plantings could be up by about 1.3% versus the August 2018 USDA estimates. They also show that soybean plantings could drop by 5.5% with soft red winter wheat down by 7.1%, hard red winter wheat steady and durum plantings up by close to 20%. Sorghum planting are also expected to drop by 12%. The numbers do seem to make sense as farmers will plant what they can sell for a reasonable price and with the China situation both soybeans and sorghum are on the questionable list. 

Some difficulty in logistics in the US Gulf has pushed nearby corn byproducts prices higher once again and this is coupled with a week of quite good export demand – all of which was trying to push prices higher. Most new sales are being done out in March/April as February shipment is tight and prices higher. One would be quite hard pressed to find any shipping positions left for February.

Except for the bump up in spot prices the trend seems to be steady for a few weeks out. Prices should continue to follow what happens to corn and soymeal.

Without any USDA export numbers, it is tough to know exactly what is being shipped and to where – just shows how much we get uses to the weekly/monthly information.

There could be a bump up in corn gluten meal demand if buyers in Bangladesh decide to replace banned meat and bone meal with corn gluten meal, but most traders think that they will buy from China rather than from the US – from China the CGM is closer, quicker and cheaper, they just must be careful which producer they buy from.

There was an article in the US this week saying that higher DDGS prices in the country are making pig farmers switch out of expensive DDGS to more cost-effective corn or soymeal. Use in hog feeding is said to have dropped from 30% down to 10%. However, as the article points out, DDGS prices dropped by about 10% in January 2019 due to the drop in US demand and the reduced exports to both Thailand and Vietnam this due to fumigation complications.

Of course, we all must remember that DDGS is a byproduct of ethanol production and how goes ethanol so goes DDGS.

Container shipments, minimum 200 m/t

The markets for animal proteins in Asia are reported to have been very quiet this week but prices into the major market in Indonesia are said to have slipped lower. Local Indonesian stocks are said to be high, but exporters are being quite aggressive in trying to capture some Indonesian business. Still no change on Australian access to the market but OZ exporters are hoping that it won't be too much more in the future.

Export MBM prices from both OZ and New Zealand are reported to be about USD 10 m/t lower but poultry meal and feathermeal remain steady to higher. The same is seen in the US with some weakness in export MBM prices but steady for other animal proteins.

The Jacobsen Report this week was saying that prices should probably be moving higher, but that supply is weighing heavily in the market and further that low vegetable protein prices are keeping animal protein prices from moving up.

The ban of the importation of meat and bone meal by Bangladesh has made life difficult for poultry farmers as they don't have alternatives available to replace MBM. The government says that MBM "can carry harmful viruses, bacteria and other ingredients harmful to human and animal health" – sounds just like the EU many years ago. The government has added that it is very difficult for port offices to accurately assess the quality of MBM which had resulted in poor quality product entering the country. They also added that the poultry industry was consulted and advised well in advance of the MBM import ban.

Thinking back a number of years (quite a number), Egypt imported about 100,000 m/t of MBM per year then overnight banned import due to pork particles in the MBM. Within a year or so Egypt was importing about 100,000 m/t of corn gluten meal – so there are easy alternatives, but a ban does bring short term hardships – as the poultry farmers of Bangladesh are finding out.