Global feed markets - May | June 2010

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					         Digital Re-print - May | June 2010
Feature title: Hygienic Global Feed Markets - May | June 2010



         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
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         or by any means without prior permission of the copyright owner. Printed by Perendale Publishers Ltd. ISSN: 1466-3872




                                 www.gfmt.co.uk                                                                                       NEXT PAGE
                                                                                                                                                                                                                                        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.




     At the moment,
                           Big crops on the way                                                                                         which - like Europe’ -
                                                                                                                                        flattened in the past season,
                                                                                                                                                                                                                                                                                          there has been
                                                                                                                                                                                                                                                                                          under-rated as




                         W
                                                                                                                                        has shown signs of picking                                                                                                                        some analyst s
                                           eather for northern                are also keeping downward pressure on prices              up. Stronger maize import                                                                                                                         suspect, resulting
     oilseed/protein                       hemisphere winter-                 across the feed raw material sector.                      buying has also been seen                                                                                                                         i m p or t n e e d s
                                           sown wheat and barley                 Sowing progress and crop development has               from some of the big Asian                                                                                                                        could become
 markets still have                        crops has remained                 been slower for spring wheat in Canada, parts             importers like South Korea                                                                                                                        an impor tant
                         mostly favourable in recent weeks                    of Europe, the former Soviet Union and Far East           and Japan. China has also                                                                                                                         inflationary factor
     to see what the     and harvests prospects currently look                Asia after a long hard winter, followed by too            also brought a frisson of                                                                                                                         for feedgrain
                         promising. As expected, world wheat                  little rain in some areas and too much in others.         excitement in the market, buying some            meal consumer, second largest maize user)                               costs, including wheat.
     weather brings      area has not dropped much in response                However, with no major weather problems yet,              signicant volumes from the US for the first      this factor – i.e. Chinese weather and crop                               International wheat trade also had a more
                         to low prices and current estimates                  adequate crops are still being built into most            time in several years in an attempt to control   progress - will certainly be watched closely                            active spell mid-way through the period
         for Northern    suggest output within 10m tonnes or                  analysts forecasts for these regions too. Global          rising domestic feedgrain prices. Given the      by the international grain trade in the weeks                           under review as some import buyers appear
                         so of last year’s bumper 680m tonnes.                supplies will also be supplemented by huge wheat          size of China’s market (the world’s top soya     ahead. If China’s domestic grain supply deficit                         to have started to scent bargains. However
Hemisphere oilseed       EU wheat production is actually                      and ample maize stocks being carried in from
                         expected to increase by 5m or 6m                     last season.
  crops – and what       tonnes, creating a larger surplus over                  World barley production will be down for a

    South American
                         domestic and export demand – even
                         with an extra 2m tonnes going to the
                                                                              second year running and below consumption
                                                                              but that will not require much stock drawdown.              Efficient conveying                                                                       The Hydro-Probe II Moisture Sensor
                         new outlets in ethanol fuel plants.                  In Europe itself barley output should still exceed
          farmers will      The spring planting season for maize, soyabeans   demand, keeping carryover stocks at the high level
                                                                                                                                                                                                                                    Measures Moisture & Reduces Cost
                         and quality milling wheats has meanwhile got off     of the past two years. World sorghum, oats and
 actually sow later      to a record fast start in the USA where larger       rye supplies are also fairly well balanced. All this is
                         sown areas should also translate into higher         promising for consumers’ costs in the year ahead.
this year. However,      production – a probable new record for maize            On the demand side of the market, world
                         if the rest of the growing season runs normally.     import trade appears to be starting to respond
if these projections     Big South American maize and huge soya crops         to cheaper grain and feed prices. US feed demand,

are anywhere near

 correct, consumers

 can probably look
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28 | may - June 2010                                                                          Grain  &feed millinG technoloGy           Grain &feed millinG technoloGy                             PREVIOUS PAGE              NEXT PAGE                                                  may - June 2010 | 29
                                                                                                                                                                                                                   GFMT quarter page vertical 105 x 147 plus 3mm bleed.indd 1                              21/04/2010 09:56:21
                                                                                                                                                                5O%D
                                                                                                                                                               8 KE
                                                                                                                                                                 BO
  so far, there are no windfalls for exporters      exchange rate which has spurred more EU          cost of this will halt EU growth have seen the
  like last year’s, when Iran turned around         export trade and raising the intrinsic value     euro plummet to four-year lows versus the
  world wheat trade, emerging as the largest        of grains in euros. The price rise was also      dollar as we go to press. With some financial
  single importer when it took 9m tonnes.           exaggerated by a previous long standoff          analysts questioned the long term survival
                                                                                                                                                                                                                                                                                                                    INDONESIA’S NO.1 LIVESTOCK AND FEED INDUSTRY SHOW
  In fact, this year’s, Iranian crops may have      between farmers and consumers with their         of the euro itself, it seems likely that the
  recovered enough to allow it to export to         opposing views on the value of grain. When       currency will stay under pressure for some
  its Arab neighbours. India is also exporting      exporters and domestic users eventually          time yet, keeping EU cereals more expensive
  surpluses.                                        started to run out of stock to cover their       than expected – at least until the next crop
     Even so, forward markets for both wheat        commitments, farmers and merchants had a         is seen to be on its way and farmers have to
  and maize continue to point ‘North’ with          strong hand to play and milling wheat prices     clear more bin space.
  higher prices. This is especially true of wheat   leapt to three-month highs.                         Last but not least, world financial /
  which this month displayed a hefty 17%               Protein markets have been dominated           commodity markets are also watching US
  premium on the Chicago futures markets for        by the conflict between tight US old crop        and European government moves to curb
  spring 2011 deliveries. The forward strength
  is mainly driven by ‘outside’ investors
                                                    and record global new crop supplies. Latin
                                                    American soya output has met our most
                                                                                                     the influence of speculative money in grain
                                                                                                     futures markets with their huge influence
                                                                                                                                                                                    1
                                                                                                                                                              THE 5TH INDONESIA’S NO.
  buying into distant futures markets on the
  assumption that grains are ‘undervalued’
                                                    optimistic trade forecasts but slow marketing
                                                    caused by weather, currency differentials,
                                                                                                     over the cost of grain in physical markets.
                                                                                                     Given the key role the ‘outside’ forces
                                                                                                                                                              LIVESTOCK AND FEED INDUSTRY EVENT
  versus other commodities and assets, that         expensive Latin American freight costs and       played in the record grain price boom of the
  global economic recovery will ultimately          fears of Argentine farmer/port strikes has       previous season, such curbs will doubtless
                                                                                                     be welcomed by grain and feed consumers.

                                                                                                     Commodity highlights -
                                                                                                     Chinese maize demand offsets record                 C



                                                                                                     US sowing pace                                      M


                                                                                                        Market-leading US maize futures prices           Y

                                                                                                     have firmed up in recent weeks as big US
                                                                                                                                                        CM
                                                                                                     crop hopes have been subdued by ideas that
                                                                                                     China might continue to raid world supplies        MY


                                                                                                     to fill its growing deficit in this grain. China   CY


                                                                                                     used to be a major maize exporter itself,          CMY

                                                                                                     overtaking Argentina as the second largest
                                                                                                     supplier earlier this decade on the back of         K



                                                                                                     annual rises in its domestic production. In
                                                                                                     recent years, however, China’s own crop
  expand demand at a faster rate and/or that        forced top soya importer China and other         expansion has slowed amid competition
  something major might eventually go awry          buyers to keep mopping up remaining US           for dwindling agricultural land resources,
  with crop weather.                                old crop supplies. Some analysts see this        droughts and other weather problems. At the
     However, until there is any evidence to        buying (at a time when the world is facing       same time, its domestic demand continues to
  support that view – and with supply/demand        a potential new crop glut of soyabeans) as       reach new record levels, mostly driven by its
  fundamentals as slack as they are right now       evidence of a bigger problem with China’s        expanding feed industry. As the price of corn
  - it remains very hard to see how higher          own oilseed crop and perhaps a pointer to        on Chinese markets has begun to soar, the
  forward prices can be justified. Consumption      much greater feedstuff demand from this          government has begun to make big inroads
  of wheat, outside of shifts in feed demand        buyer down the road.                             into its strategic reserve stocks, auctioning
                                                                                                                                                              Hosted by                      Supported by                                                                           Media Partners                                                                                                                                         Organised by
  (mainly caused by fluctuations in maize              Grain markets are also continuing to          them off to feed users in an attempt to                                                         P
                                                                                                                                                                                                         A R
                                                                                                                                                                                                             T E
                                                                                                                                                                                                                 M

                                                                                                                                                                    Directorate General




                                                                                                                                                                                                                     E
  supply), is still growing only slowly over the    struggle with volatile ‘outside’ influences –    control the market. China is actually the




                                                                                                                                                                                             DE




                                                                                                                                                                                                                         N
                                                                                                                                                                    of Livestock Services,




                                                                                                                                                                                                                        A N
                                                                                                                                                                                             P E
                                                                                                                                                                    Department of




                                                                                                                                                                                                 R




                                                                                                                                                                                                                     I
                                                                                                                                                                                                     IN             R         DEPARTEMEN PERDAGANGAN
                                                                                                                                                                    Agriculture                           D U S T                      REPUBLIK INDONESIA



  long term and will not expand by enough in        the macro-economic markets like equities,        largest maize stockholder by far outside of                                                                                                                                                                                                                                                                                                          Napindo

  2010/11 even to match this year’s forecast        gold, crude oil and currencies. Most of the      the USA with an estimated 53m tonnes at                                                                                                                                                                                                                                  ! " # $ % & $ ' # ( # '




  production. That means wheat surpluses are        news has centred on the problems in the          the close of this season (end of August( equal
  likely to keep growing in 2010/11, providing      eurozone and the interminable efforts made       to about a third of its annual use (compared
  an ample security stock in the run-up to next     by German, French and other leaders to           with the US which seems to be quite relaxed
  year’s harvest.                                   assure markets that Greece’s economic            about hold less than 16% of its consumption                REPLY COUPON                                                                                                                                                                                                                            www.indolivestock.com
     Ironically, the adequately supplied            problems can be contained and will not be        in stocks). Officially, the Chinese authorities
  European wheat market has recently ignored        repeated across south Europe. But even a         say they can manage comfortably on their                        Please send me more information on exhibiting                                           Name: .......................................................................................................................................................................................................
  this global/domestic picture of plenty to rise    trillion-dollar rescue package put together      stocks but many western experts have                            at INDO LIVESTOCK 2010 EXPO & FORUM
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  strongly over the past month. Most of this        in May has struggled to convince sceptics        doubts about that. For a start, some think                      Please send me more information on visiting                                             Company: ..............................................................................................................................................................................................
  trend is down to the plunging euro/dollar         that the EU is back in control. Fears that the   Chinese crop figures are inflated and that last                 at INDO LIVESTOCK 2010 EXPO & FORUM
                                                                                                                                                                                                                                                             Address: ..................................................................................................................................................................................................
                                                                                                                                                                 For futher information, please call/ fax to:
                                                                                                                                                                                                                                                             .......................................................................................................................................................................................................................
                                                                                                                                                                 PT. Napindo Media Ashatama,
                                                                                                                                                                 Jl. Kelapa Sawit XIV Blok M1 No. 10 Billy & Moon,                                           Tel: ......................................................................... Fax: ..........................................................................................................................




                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       GrainFeed
                                                                                                                                                                 Pondok Kelapa, Jakarta -13450, Indonesia                                                    Mobile: ....................................................................................................................................................................................................
30 | may - June 2010                                                                                       Grain &feed millinG technoloGy                        Telp. +6221 8644756/ 85, 8650962, Fax. +62218650963                                        PREVIOUS PAGE                               NEXT PAGE
                                                                                                                                                                 Email: info@indolivestock.com                                                               Email: .............................................................................................................................................................................. ........................
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year’s maize harvest was closer to 140/145m       completed at a record fast pace, taking            ever tightening balance because supply isn’t
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get close to 160m this season. Some analysts         Last year, crops performed well despite         lesser extent, Brazil, is only increasing slowly.
think China will absorb the lion’s share of its   the late start, delivering record yields for          While the US accounts for about 40% of                     – Product Handling, Storage and Distribution
maize production deficit by taking its stocks     many farmers. This year’s flying start, an         world maize output, supplies are also growing                 – Flour                                                   nabim Members: Discount £95 per module (£200)
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                                                                                                     harvested have turned out much bigger than
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                                                                                                     year’s rather poor results. Plantings in the
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                                                                                                     former Soviet Union are also seen higher
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US maize now because it is much cheaper           weather in the near term forecast gives early      heavily influenced by maize which accounts
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than domestic corn. They expect import            promise of yields at least as large (though        for 45% of total world grain supply.                          guidance throughout the course year.                                                     email: info@nabim.org.uk
purchases to slow markedly once China’s           the USDA currently has them a little lower
crop is seen to be up and running. Others         than last year’s). As always there is still time   EU wheat prices up
are not so sure, questioning the accuracy         for a mid-season drought, a heatwave to
of Chinese stock estimates and pointing to        spoil pollination or a wet harvest but unless         EU wheat markets staged a remarkable
a late cold spring delaying Chinese maize         conditions do turn unfavourable the crop           recovery last month as many consumers
sowing this year as possibly pointers to a        outlook is very promising. Some sources also       came in to cover long-delayed needs only to
greater deficit and perhaps 2m to 4m tonnes       suggest US farmers might sow more than             find farmers digging in their heels for higher
of imports this year (versus about 600,000        the officially forecast 88.8m acres, perhaps       prices. Primarily, the move reflected the weak                   We pride ourselves in implementing      > Turnkey installations
bought to date).                                  as much as 90m or more. That could push            euro stimulating more export demand for EU                       the latest technological
   However, even if that were the outcome,        production from the world’s largest maize          grain. However, it was also fed by bouts of                      improvements                            > Cleaning equipment
the world maize market should have no             supplier up by 15m or even 20m tonnes from         strength in the US market, largely caused by
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difficulty meeting this demand without            last year’s record 333.5m tonnes.                  speculators needing to cover some of their
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causing a big jump in prices. The US, which          Analysts are currently looking for a rise       large short (sold) position in Chicago futures.                  services
exports about 50m tonnes a year (about            of no more than 10m tonnes in US domestic          However, while the US soft winter wheat                                                                  > Extraction Control
57% of world maize trade) is hardly short         demand, mainly down to higher ethanol use          crop, as traded on Chicago, is expected to                       Our goal is complete customer           > Packaging
of supplies and expects to see its carryover      (+7.5m) with animal feed up by perhaps             be considerably smaller this year, stocks                        satisfaction in the production of
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stocks of this grain increase in the coming       another 1.5m. That would still leave the           from last year are high and demand for this
season. About 38m tonnes of maize exports         US able to export 5m tonnes more than in           grade poor, especially on export markets
should also be available from other suppliers,    2009/10, without eating into the comfortable       where much cheaper European and ‘Black
led by Brazil, Argentina, the Ukraine, other      carryover stocks carried in from last season.      Sea’ (former Soviet Union) soft wheat has
eastern European nations, India and South         US stocks are larger than expected a few           dominated most of the non-routine business
Africa.                                           months ago after official surveys found less       for months.
   The world maize balance meanwhile looks        had been used than expected - despite ideas           Higher up the wheat quality scale there is
reasonably healthy with production expected       that lower quality from the wet 2009 crop          no lack of competition for business either.
to grow by about 26m tonnes in the coming         might mean more grain having to be fed per         A lot of higher protein Canadian wheat has          Konya Organize Sanayi Bölgesi 7 Sokak
season as consumption increases by just 19m       head of livestock (see earlier GFMTs).             been available recently while quality wheat
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– so some stock accumulation on the way.             Nothing in the US picture at present is         supplies are also said to have been piling up
   The US maize crop picture could hardly         remotely bullish for maize either in terms         in Australia which failed to export as much as      T: +90 332 239 1016 (pbx)
be much different from that of the past two       of prompt or forward delivery prices. Yet          it needed to in the first quarter of this year      F: +90 332 239 1348
years when incessant rains delayed sowings        some of banks and investment houses have           from a bumper harvest. As a result, hard            E: unormak@unormak.com.tr
well beyond what the prime sowing window          still been trying to talk the market up on         quality wheats have generally tended to come
for good yields. This year, sowing is being       the basis that this market is heading for an       down in price in recent weeks. During May,
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                                                                                                                                                         Unormak.indd 1                                                                                                     24/11/2009 15:56
32 | may - June 2010                                                                                         Grain  &feed millinG technoloGy                 Grain  &feed millinG technoloGy                 PREVIOUS PAGE   NEXT PAGE                             may - June 2010 | 33
                                                                                             COMMODITIES

  US Dark Northern spring wheat for shipment       rising sharply from Argentina (if the crop           This situation is unlikely to last much
  out of the Gulf fell from $294 to $270/tonne     there recovers as expected) and moderately        longer as the full weight of record Latin
  compared with $325 this time last year. Hard     for Europe too, based on crop expansion,          American soyabean crops comes to bear
  Red Winter Wheat also slipped from $199 to       weak currency and smaller crops from key          on the market. These are up by about 36m
  $184 versus $243 a year ago. Unusually the       competitors in the former Soviet Union            tonnes in a season when US output also




                                                                                                                                                                            VIVChina 2010
  lower grade Soft Red Winter wheat has been       (currently expecting a 5m tonne drop in           rose 11m to a new record 91.4m tonnes.
  trading at a premium of up to $6/tonne over      production). Canada will also have a smaller      The total increase in terms of world soya
  HRW compared with its normal discount of         crop but Australia should have another large      meal equivalent is over 37m tonnes whereas
  around $50/tonne. Along with the soaring         one and with countries like India and Iran also   demand for the latter is only up by about 7m
  dollar, this has shut the US out of most soft    joining the export fray, keen competition         tonnes this season.
                                                                                                        Soya meal prices have already eased in
                                                                                                     recent weeks on US and European market
                                                                                                     and, if the US crop continues to get good
                                                                                                     weather, the trend is expected to remain          September 6 - 8, 2010




                                                                                                                                                                                                         Beijing
                                                                                                     downward.
                                                                                                        Next year, supply may not be quite so
                                                                                                     loose as USDA expects soya production
                                                                                                     in South America to slip back by 7m or 8m
                                                                                                     tonnes. Even so, if the US crop again exceeds
                                                                                                     90m, as currently seems likely, new supplies




                                                                                                                                                                                          a 2010
                                                                                                     of soyabeans will again outpace growth in
                                                                                                     world demand, leading to carryover stocks



                                                                                                                                                                                  IV Chin
                                                                                                     (into 2011/12) rising to a new record 66m




                                                                                                                                                                        d visit V
                                                                                                     tonnes.
                                                                                                        Moreover, even if soyabean output does



                                                                                                                                                            me an
                                                                                                     slip back a bit in 2010/11, USDA expects


                                                                                                                                                         Co
  wheat import tenders as buyers paid up to        for import customs should continue for            that to be offset by increases in supplies of
  $25/30 less for EU/Black Sea grain. Even         some time yet. This should help keep the          cottonseed, rapeseed and sunflowerseed,
  US hard spring wheat is struggling to find       price of wheat down on international and          leading to a decline in world oilseed
  enough buyers amid the competition from          EU markets.                                       production of just 2m tonnes. That will be
  similar Canadian grades.                                                                           eclipsed by an expected 75.5m tonnes of
     World wheat production in 2010/11 is          Oilmeals/proteins                                 various oilseeds carried into the new 2010/11
  currently forecast by the IGC at 660m tonnes                                                       season this autumn – 11m more than last year.
  versus last year’s 675m due to slightly lower       Soya-meal costs had a brief run-up in             At the moment, oilseed/protein markets
  sown area and ideas that yields will probably    April as top importer China continued to          still have to see what the weather brings
  slip from the past two years’ above-normal
  levels. The USDA is more optimistic,
  pitching output at 672m tonnes (680m) but
                                                   buy heavily from the US at the tail – end of
                                                   the latter’s season. Latterly, however, prices
                                                   of beans and meal have been working lower
                                                                                                     for Northern Hemisphere oilseed crops
                                                                                                     – and what South American farmers will
                                                                                                     actually sow later this year. However, if these
                                                                                                                                                       www.viv.net
  has consumption at 667m (up 15.8m) versus        again amid confirmation of record crops in        projections are anywhere near correct,
  the IGC’s forecast 654m (+9m). The biggest       South American and an excellent start to the      consumers can probably look forward to
  increases are seen in EU ethanol and feed        US planting and growing season.                   some declines in oilmeal costs later in 2010.
  demand (+3.2m in total) and former Soviet
  countries (mainly in feeds, +3.8m tonnes).
                                                      Latest estimates suggest China will import
                                                   49m tonnes of soyabeans in 2010/11 (starting
                                                                                                                                                       The international platform
                                                                                                                                                       for the Chinese Feed to Meat industry
  Demand is also expected to rise in India and     September 1) – accounting for 57% of world
  in aggregate in a number of smaller countries.   trade. It was also consume about a quarter
     The bottom line is that both the USDA and     of all the world’s soya meal production
  the IGC see world wheat stocks increasing        (40m tonnes), putting it well ahead of the
  next season - by 4.7m and 6m tonnes              EU’s 32m and the USA’s 27.6m tonnes. In
  respectively. At 198m tonnes, USDA’s stock       recent months it has surprised the markets
  forecast for July 2011 would be over 73m         by buying up the USA’s rapidly dwindling                For information about
  more than the 2007/08 total and a nine-          old crop stocks, partly because it is still
                                                                                                       adverting opportunities within
  year high.
     USDA also sees world wheat exports
  next season staying fairly flat at around 129m
                                                   cheaper to ship beans of the Northwest
                                                   American coast than from Latin America
                                                   and partly because of concerns that strikes in
                                                                                                           GFMT, please contact
                                                                                                              Caroline Wearn
                                                                                                                                                       New CIEC, Beijing
  tonnes with no notable swings in importing       Argentina, port congestion in Brazil and slow           Tel: +44 1242 267707
  country trade. Plentiful supplies should keep    selling by producers will result in delays in
                                                                                                       Email: carolinew@gfmt.co.uk
  competition for sales brisk with exports         shipments from the Latin American origins.




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                                      twin-shaft                                       In this issue:
                                      paddle mixers
                                         The ultimate in mixing
                                         technology                            •           Grain storage
                                                                                     - The Canadian way
                                                                               •        Simultaneous
                                    • The use of                                     determination of
                                         peripheral                                       mycotoxins
                                         machines
                                         in flour mills of today               •                Hygienic
                                                                                               Compact
                                                                                            Containment
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GFMT10.03.indd 1                                                                                                28/05/2010 10:15




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