price trends - tn asia pacific€¦ · additional lyssulfate capacity also cj lysine hcl is now...

$Price Trends

Driving Sustainable Growth by expanding our horizons

FEBRUARY 2014

Contents

2 Grains, Vegetable Oils & Proteins

4 Marine Products

5 Dairy

6 Amino Acids

7 Vitamins

8 Minerals and Trace Elements

As part of Nutreco we follow the Nutreco’s strategy to ‘Driving sustainable growth’, seeks to increase profitability through innovative and sustainable nutritional solutions, while leveragingour position and capabilities to seize global opportunities in agriculture and aquaculture.

We aim to be the leader in the development and supply of highervalue-added nutritional solutions that are tailored to meet unique on-farm requirements. We have combined our knowledge of customer needs with technical know-how and further expanding our horizons into the market trends and information on the main ingredients in our industry.

In this issue we brings you the new look of our Trouw Price Trends information (previously TopPost), we are pleased to keep sharing the latest updates on the world grain market as well as raw materials information with you, our prestigious customers.

We wish you a strong year that could expanding our horizons in “Driving Sustainable Growth” in the year of the Horse. Together we will have stronger partnership in exchanging information to keep our industry growing and have more sustainable future.

Sincerely,

Nabil ChinniahProcurement Lead Asia-PacificTrouw Nutrition International

Nabil ChinniahProcurement Lead Asia-Pacific

Trouw Nutrition International

Trouw Price Trends | February 2014

GRAINSMarkets fundamentally are bearish, especially for wheat due to large crops for 2013 and current expectations for 2014 where another big global harvest is foreseen.

However in the course of this week markets found support due to the weather conditions in the US and Black Sea region.

For the Black Sea region protective snow coverage is forecasted but for the US there is clear and present danger for damage given the extreme polar conditions lately.

VEGETABLE OILSPALM OIL

Palm market has rallied on its own last months. Market now forced to follow decrease in soy bean oil and crude mineral. Palm S&D shows slowly increasing stock. Production and export down market range 2400-2600.

Fundamentally market would be testing the lower range due to S&D figures, and due to competition from

other veg oil (soy) will have effect on the market price. New direction will most likely be lightly downward.

Palm market is expected to tend further down together with Soy oil and diesel prices. This to keep attracting the necessary additional demand. Today soy oil is at same price as palm oil.

CPO

Cover position until end February at current prices. There is a small discount on the short. If prices decrease beneath MYR 2,400 one might cover some future months. 2-3 months. Prices beneath MYR 2,300 considered to be attractive for long position.

SOY OIL

Due to high demand on soy bean meal on attractive prices, the crush takes the soy oil for granted for oversupply on soy oil. North America supply is still tight. New crop will not create unmanageable stocks. So market downside is limited.

South America - Argentina: Sellers remain short to prevent inflation to hurt their income too much.

South America - Brazil: Demand outpaces supply due to line up in supply chain.

Still soy oil not correcting upwards. Futures in a small carry. This makes it easy to stay short, physical product to come to the market and further easing of crude mineral oil. Chinese macro-economic is better than expected and weather market (drought in US).

RSO

Market is looking at soy market. Due to higher intake from biodiesel on palm/soy blend, less RSO has been used.High output Canola in Canada and EU soft weather conditions positive on output predictions.

|2

GRAINS VEGETABLE OILS & PROTEINS


|3

Also long term (Canada aims for higher output: expectations coming in 12 years within 18 Mln MT 2013 to 26 Mln MT 2025). Weak crude/gas oil put pressure on RSO as well.

PKO

PKO keeps a discount of approx. $ 100/MT to CNO. This is needed to keep the PKO more attractive than CNO. Stocks slightly increasing. Excellent crush margins for PKO will have positive effect on supply, although production is moving to low cycle.

PKO will follow CNO where possible. Sometimes with delay. Sometimes very quick. Due to the bad weather conditions in the origin, consistent supply is threatened for CNO. Possibility of ‘’hole’’ in supply chain is big threat. Switching from CNO to PKO still very limited.

CNO

Stay away from the short. Cover at least 3 months ahead. This is to prevent from product tightness in destination. Keep in mind, in the first months the CNO was already shipped before to the typhoon. Now new deliveries should arrive. This can interrupt availability.

VEGETABLE PROTEINSSOY

Soybean prices at the Chicago exchange are under pressure this week. Main drivers are the improved weather conditions in Argentina (rain) combined with the existing outlook for record crops in South America.

Markets are positioning themselves for the new crops to physically come available and are switching origins from US 2013 crops. Soybeans did not find support in the grain markets having no weather issues at stake.

$

Palm market is expected to tend

further down together with Soy oil and diesel

prices.

Soybean prices at the Chicago exchange are

under pressure this week.

Cover CNO supply for at least 3 months

ahead


|4

MARINE PRODUCTS

The fishing season in Peru is almost finished.

Availability of fishmeal is scares, but probably because the producers still waiting analysis results of the lots, because during December and January they have been dedicated to load the big volume for China.

Prices have been affirmed due to this reason.

Bear and Bull

Product: Fishmeal - South American

Drivers Downwards There are not so much downwards drivers

Drivers Upwards Scarse of products. Markets are active

Last Spot Super Prime US$1500/1520


LIQUID MARKET DEVELOPMENT

Milk production in the EU is still much higher as previous year. With current high milk production we would expect that prices of commodities would decrease, but we do not see any signs to support that.

Skimmed milk prices are moving up fast again. Producers still have sufficient capacity to absorb the available volumes as long as prices are lower than smp. We see however lower prices for liquid whey so producers have to choose between either smp or swp production. Coming weeks we will see more milk in EU and we expect that producers will soon have a lack of capacity and therefor prices of smc will decrease again.

POWDER MARKET DEVELOPMENT

SMP feed is much lower than food, so we should expect prices of feed to increase at least to levels of € 3,200. In EU a lot of producers are producing smp, so more products will become available.

Global prices are firm so no reason so far to assume that smp prices will decrease. In last week’s auction of Fonterra we have seen some products decrease slightly in price. SMP, WMP and AMF. Not sufficient to make a big change in the market.

This month there is another auction of Fonterra. The outcome of that auction will determine the trend of the prices in EU. If prices remain stable, also EU won’t change.

|5

DAIRY PRODUCTS

Milk production in the EU is still much higher

as previous year.

Fontera auction will determine the trend of

the prices in EU.

Euro is getting stronger and will have a negative impact on

EU prices.


STABLE AMINO ACIDS MARKET

LYSINE MARKET

The global market remains in an oversupply situation and driving prices to the bottom not seen for 6 years. Producers have lately reacted and reducing their output. Producers have now increased their prices slightly with a few cents. After Chinese new year it is a normal weak period for amino acids demand in China and therefore the upward potential is limited. Strong competition in N-AM where not only Evonik tries to increase their market share with additional LysSulfate capacity also CJ Lysine HCL is now finding its way into the market. Demand for amino acids remains very good with current spread on soy vs corn or wheat. Price differences per region are small. Price range for Lysine HCL 1,35-1,55 USD$/kg. The discount for Liquid Lysine is disappearing, coming from 15 ct discount to 0 - 2 ct.

METHIONINE MARKET

Adisseo production disruption did not improve as quickly as expected and will also impact February, which will affect the supply chain to other regions as well. Evonik is completely sold out for Q1. Adisseo production stop due

to MMP shortage and strikes at the French refineries have enforced them to limit their supply in January, effecting especially Europe. This is only for DL-Methionine, the Spanish factory for liquid MHA had enough stock build up before Christmas. For Q1 the market prices in EU and Asia where most effected and increased by at least 10 ct or higher for uncover volumes. Expect situation to normalize again moving into Q2, which is normally a weak period for Methionine. The production stop with Unisplendour in China remains unchanged due to environmental reasons, nevertheless they keep expanding their capacity by building a new factory in Ningxia. Adisseo is on track with its new production facility and started the first startup production, by importing the raw materials from their French facilities. We expect serious output in mid-2014. The capacity expansion for the coming years will be like a dark cloud above the Methionine market mainly for 2014.

THREONINE MARKET

No real changes vs last report. Idem as Lysine low prices and producers reducing their output. MeiHua with maintenance, Eppen new factory delayed in startup and CJ production in China affected by contamination. The overcapacity will put a cap on too high prices. Especially Europe is more than enough covered with Chinese Threonine for Q1. However

|6

AMINO ACIDS

Bear and Bull

Product: Lysine

General Overcapacity globally

Drivers Downwards Lower commodity prices narrow spread Soya-Corn or with Wheat

Drivers Upwards High demand with high and volatile commpdity prices. High raw materia prices sugar, corn-starch, molasses. IP issue in Europe minimizing leverage with Chinese producers.

Last Spot 1.40 - 1.60 USD$/kg CIF

Bear and Bull

Product: Methionine

General Adittional output/capacity to build globally: Adisseo China mid 2014

Drivers Downwards Evonik Singapore mid 2014 CJ - Malaysia with L-Methionine end 2014.Large margin gives room to lower prices

Drivers Upwards Average yearly demand growth +6% Price differences per region

Last Spot CIF 3.20 usd$ - 3.75 usd$/kg2.60 €/kg for contract level, spot >2,70 €/kg


prices increased lately from reduced output and producers asking higher prices, it remains to be seen how strong this is over the next months as slow demand is expected in China after Chinese new year. N-AM prices are stable but on higher level. More imports seen here as well. AT the moment the market is moving >1,80 USD$/kg.

TRYPTOPHAN MARKET

European demand is increasing for Europe and especially in USA. Therefor Ajinomoto decided to allocate more volume outside EU, where also prices are much better for

Tryptophan. CJ realize that their volumes are easily booked in Europe on Q1 and therefor decided to stop offering and NOT accepting any new contracts in Q1 also supported by additional sales in USA). Evonik was already out of EU or at higher price level. Price in EU is > 14 €/kg for spot business. With current price level < 15 USD$/kg (12 €/kg) it is attractive to keep Tryptophan in grower and finishing diets for pigs. Both CJ and Ajinomoto have no intention to increase prices above 13 €/kg, also this would attract the Chinese producers to start up production again. Only Julong, MeiHua and Eppen remain.

|7

VITAMINS

VITAMIN E

Vitamin E have stabilized and even firmed a little in the past two weeks. As mentioned before, the initiative from the Western producers to increase the price was not followed by the Chinese as - at least one producer - feel they have lost significant market share in the past quarters. This producer first wanted to gain back market share before increasing the prices and running the risk to lose even a bigger share. Now it is interesting to see that this producer has indeed gained back market share and that they are at a much comfortable position then at the end of Q4. The likeliness that these producers will increase the prices towards Q2 - probably after Chinese New Year - has increased.

The DSM results that were published 2 days ago - that resulted in a stock price drop of 10% the first day and followed by an additional drop of 2.5%, helps the Chinese believe that also DSM will push for higher prices in Q2. BASF considers Q1 as an investment and Q2 is harvest time: also BASF will prevail in the higher pricing level. Then ZMC might follow, but this is uncertain at the moment. If

ZMC remains offering low prices at their premix customers (mainly in the US), other premixes will demand these price levels from their suppliers as well. When purely looking at the fundamentals (supply capacity) / demand) the price trend is and remains down. Now it comes down to discipline and trust! In all the likeliness that the Vitamin E price will bounce in Q2 has increased: if we have to bet, we would say up!

VITAMIN A

Vitamin A situation is completely different. There, one Chinese producer, who has a strong part of the Vitamin A market tried already half a year ago to push up the prices for Vitamin A - at that time without success - as they believe the price level of USD 27.00 or EUR 21.00 is not sustainable. They followed the Western producers where the other Chinese producer does not have a big vote in the Vitamin A market. One Chinese producer stopped quoting till after Chinese New Year - as they believe that the price can be up further. The other one has environmental issue


and has to stop production for even a longer period after Chinese New Year. Also one (smaller) European producer has production problems. The sentiment on Vitamin A is strongly up.

CALPAN

Calpan has strongly moving up. Current prices for medium to large customers are at around USD 17.00 - USD 18.00. The price policy of the Chinese market leader has turned out successful helped by capacity limitations with competition. The expectation is that the price might go up further. Current price level is long term not sustainable as others with start production and pushing the prices down.

FOLIC

Due to environmental issue 3 folic producers have to stop production. Prices are up and are expected to continue to go up.

VITAMIN D3

D3 will continue in its way down: there are too many producers that supplying the product and Garden has changed its pricing policy as they could not hold on to it.Phosphate fertilizer demand continues to recover especially in Brazil and prices increase at very quick pace as stocks are also low after the declining prices of 2013.

MINERALS & TRACE ELEMENTS

Phosphoric acid is expected to follow the upward trend as contracts are settled. Though feed prices are currently stable with suppliers confirming unchanged prices or with Q1 already covered these fundamentals suggest Q2 will be up in all regions. The impact of changes in the EU supplier landscape are likely to mean prices increasing more in Europe than Asia/Americas but it is expected suppliers will wait for the trend to be confirmed before offering Q2.

Copper metal has remained mostly stable over past 2 weeks as the market weighs information relating to reductions in inventories and anticipation of future demand in China and USA. Copper Sulphate prices are at similar levels to early 2014 after rising due to LME and, in EU, cost increases due

to imposition of import duty on Russian product. It remains to be seen if this will continue or, if volumes are reduced, the Russians start to absorb the cost increase to win back share. Future price development will be determined by LME movements with most, but not all, commentators suggesting future weakness.

Zinc oxide prices remain stable despite ongoing talk of higher prices due to tight supply of scrap products from the galvanizing industry which are used as the raw material. Some upwards movement in Canada seen.

Adopted from vArious sources

DisclaimerThis information should not be distributed to other parties than yourself without prior written approval of the author. Furthermore no legal or other rights can be obtained from this information. The content has been verified independently and is only intended for information purposes. The receiver is responsible for his own verification of this information using independent sources. The author of this document can not be held liable for any damage or loss arising directly or indirectly out of the use of information supplied.

TROUW PRICE TRENDS brought to you by:

Trouw Nutrition Asia Pacific MM 2100 Industrial Town • Jl. Selayar Blok A 3-2

Cikarang Barat • Bekasi, 17845 • IndonesiaPhone: +62 21 89983325 • Fax: +62 21 8998 3326

www.trouwnutrition.co.id • www.nutreco.com TPT009/NL/200214/AP

price trends - tn asia pacific€¦ · additional lyssulfate capacity also cj lysine hcl is now...

Documents