Feed supply issues coming down the line

Feed ingredient supply issues are coming down the line and prices are only going in one direction, Tony Markey, managing director of ADM Arkady Ireland, warned.

Speaking on behalf of feed importers at a recent meeting of the Inter-Agency Fodder Committee, he said: “By the end of June this year, Irish compounders had approximately 66% of their cover done for the season ahead; the season ahead being now right through to next April and that’s based on a normal year.

“Based on a normal winter, compounders have similar cover to last year. But now we feel that demand could be 40-50% higher than a normal year. At the moment, in terms of global supply issues, we are trying to push mills and buyers to get as much cover on.

“Everyone, unfortunately, is concentrating on today and tomorrow; but the important issue is getting as much cover on for next season as we can.”

He added: “Higher prices are discouraging mills from going too far ahead in a year when we need to be going far ahead and we need to be securing supplies when availability will continue to be an issue.”

Markey noted that there’s a far higher coverage of maize available for next season.

“The trade accepts that Irish grain production is going to be well down on last year and also European grain production is going to be well down.”

Indications from the UK, he said, suggest that barley production is going to sit at 6 million tonnes or lower – back from 7.3 million tonnes last year.

In 2017, the UK exported approximately 1.3 million tonnes of barley. With this year’s fall in production, the UK is likely to have no exportable surplus, thus forcing exporters further afield when it comes to sourcing supplies.

Markey also noted that the supply of feed ingredients is back, while prices are also up considerably.

Key reductions:
  • World supply of soybeans to be down by about 10 million metric tonnes on 2016/2017;
  • World wheat supplies are back by 6 million metric tonnes;
  • Soya hull availability is going to be down by 30%;
  • Sugar beet production set to drop in Europe and Russia – a fall in beet pulp supplies expected.

Markey also explained that importers can’t simply make a phone call today and expect to have the product within the yard within a week, as there’s a significant lead time before products arrive.

“Malaysia produces 5.5-6.0 million tonnes of palm kernel expeller (PKE) annually. Europe takes in 2.0-2.5 million tonnes. Ireland took in about 80,000t of palm kernel last year; it could be double that this year.

“The lead time is the problem. People want palm kernel now, but we have basically sold out of the stock that’s on the ground.

“From our own point of view, there’s 20,000t coming in August and it’s sold. The next boat of 30,000t is to arrive in October and it’s sold,” he said.

“The lead time to get palm kernel from Malaysia or Indonesia is three months and that’s from your initial call to source it, to get it delivered to a port and then get it loaded on a ship and to get it around to Ireland.

“Lead time is about six weeks to bring product in from the US. Shipping time is only 15-16 days, but the lead time is obviously longer because the product is coming down the Mississippi.

“In general, most of the shippers would be sold out. They sell out three months in advance. Elevation (loading) in the US also needs to be booked.”

When it comes to sourcing products such as soya and citrus pulp, he explained that the lead in time is seven-to-eight weeks. The lead in time for importing products from Europe is generally around one week, but availability is the issue.

Price pressure

Markey also touched on how the prices of many feed ingredients have increased significantly.

The winter price for maize is €10/t higher than last winter, the winter barely price is also up €35/t and the winter wheat price is up €30/t on last winter.

In addition, corn distillers purchased on the spot market is up €60/t verses the same time last year and corn gluten has increased by €40/t for the winter.