Weekly report - March 22, 2014

Hammersmith Marketing Ltd - Grain Trading

WEEKLY FEED GRAIN AND PROTEIN REPORT   March 22, 2014

 

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SECTION 1:  FEED GRAINS -- VEGETABLE AND ANIMAL PROTEIN

 

The important factors in the grain and oilseeds markets this week are well known to everyone with Ukraine/Russia/Crimea situation at the top of the list followed by concerns over China's imports of soybeans and corn and then there are the USDA reports on stocks and planting intentions at the end of the month. Take those three items and add in weather in the USA and South America along with US export sales and you have quite few reasons why grain and oilseed prices should be active.

 

USA corn exports had a good shot in the arm on Friday as private sector buyers in Egypt booked 340,000 m/t of USA corn for the current crop year – up to end August. This corn is to cover needs that have been filled from the Ukraine for the past while but with Black Sea shipments uncertain and Egyptian buyers needing a steady supply of corn this looks like a very good purchase to minimize supply risk. It is expected that other corn importers in North Africa and the Middle East will be looking very closely at alternatives to Black Sea shipper.

 

Even with all the somewhat bullish factors this week, corn ended up lower on the week but not by much, only a dollar or two.

 

According to trade reports, most of the normal buyers of US corn are covered for the next few weeks and expert opinions on the upcoming USDA reports seem to be about neutral at present. So prices may have some difficulty in moving higher without a good bit of bullish news.

 

Old crop soybeans (and soymeal) were both higher on the week even with the concern over what the Chinese are going to do with all their soybean orders. The situation still exists that soybeans are very tight at present and that things will not free up until South American soybeans are readily available in the market.

 

According to numbers from Brazil, their soybean harvest is 67% complete versus 64% last year with the big problem still being logistics at the export ports and exactly how long ships will have to wait to get loaded.

 

Most of the soybean experts are expecting that the upcoming USDA planting intentions report at the end of March will show an increase in soybeans and a drop in corn for 2014 spring planting. The experts are not looking for any serious change in the stocks numbers as everyone knows that the current supply is tight.

 

Looking at soybeans and soymeal there doesn't seem to be any good reason to expect a serious drop in prices for the limited soybeans available. Late 2014 new crop soybeans are quoted at about USD 60 m/t below current prices, so we all know where prices will be going in the long run.

 

 

Estimated Bulk Grain freight in USD per m/t, basis heavy grains 

 

Freight rates from the Black Sea are very difficult to determine this week but some trade reports do estimate that freight for smaller sized vessels is up as much as USD 7 m/t but that it is now very hard to fix vessels for Black Sea or Azov Sea loading over the next 2 to 4 weeks.

 

US Gulf to Europe: 60/70,000	$20.00	Steady
US Gulf to Egypt: Panamax	$33/35.00	Down $2.00
US Gulf other Med: 25,000 MT	$36/37.00	Down $1.00
US Gulf Israel: 50,000 MT	$34/36.00	Down $2.00
US Gulf Morocco: 25,000	$34/36.00	Steady
US Gulf Turkey: 50,000	$35/37.00	Down $2.00
US Gulf Japan: Panamax	$48/50.00	Steady
US Gulf China: Panamax	$49/51.00	Steady
US PNW Asia: 45,000 m/t	$33/35.00	Up $2.00
US PNW Japan: 50,000+ m/t	$25/27.00	Down $3.00
US PNW China: 50,000+ m/t	$26/28.00	Steady
France to Algeria: 30,000 m/t	$25.00	Up $1.00
France to Morocco: 30,000 m/t	$26.00	Up $1.00
France to Egypt: 30,000 m/t	$27.00	Up $1.00
France to Jordan: 50,000 m/t	$32.00	Up $1.00
France to Saudi Arabia: 60,000 m/t	$39.00	Up $1.00
Argentina to Europe: 50,000 m/t	$26.00	Up $1.00
Argentina to Egypt: 50,000	$36/37.00	Up $1.00
Argentina to Algeria: 25/30,000 m/t	$35/36.00	Up $1.00
Argentina to Morocco: 25,000	$34/35.00	Up $1.00
Argentina to Saudi Arabia	$47.00	Up $2.00
Argentina to Spain: 30,000	$34/35.00	Up $1.00
Brazil to Algeria: 25,000 m/t	$32/33.00	Up $1.00
Brazil to Turkey/Egypt: 50,000 m/t	$28/29.00	Up $1.00
Brazil to Morocco: 30,000 m/t	$31/32.00	Up $1.00
Brazil to Europe	$25.00	Up $1.00
Black Sea to Spain: 30,000 m/t	$20/21.00	Difficult to know
Black Sea to East Med: 30,000 m/t	$16/17.00	Difficult to know
Black Sea to East Med: coaster	$24/25.00	Difficult to know
Black Sea to Saudi Arabia – Jeddah – 50k	$29/31.00	Difficult to know
Baltic Dry Index	1599	Up 122
Baltic Capesize Index	3036	Up 359
Baltic Panamax Index	1112	Down 1
Baltic Handisize Index	674	Up 3

 

  

FOB port or location specified. Prices in US$, in metric tons:

All shipments in bulk grain vessels unless stated otherwise

(NOLA is New Orleans, Louisiana, USA.)

 

Wheat, USA Soft Red Winter, NOLA	USD 297>>278 Mar>>Jun	x
Wheat, USA Hard Red Winter 12 protein	USD 355>>337 Mar>>Jun	x
Wheat, Black Sea 11.5 pro, 30,000+ m/t	USD 290/295 Mar/May	x
Wheat, soft milling, France, Rouen port	USD 294/296 Mar/May	x
Wheat, milling, Argentina, upriver	USD 345/353 Mar/May	x
Wheat, feed, Black Sea	USD 250/260	x
Barley, France, Rouen port	USD 257/259 Mar/May	x
Barley, feed, Argentina, upriver	USD 234/237 Apr/May	x
Barley, feed, Black Sea, 30,000+	USD 245/260	x
Barley, feed, USA Pacific Northwest	USD 262/267	x

 

Corn, FOB NOLA USA	USD 225>>221 Apr>>Jun	x
Corn, FOB USA Pacific northwest	USD 248>>244 Mar>>Jun	x
Corn, FOB Argentina port, upriver	USD 227>>222 March>>May	x
Corn, FOB Brazil port	USD 210/215 July/Aug new crop	x
Corn, FOB Black Sea, 30,000+ m/t	USD 248/255 Mar/May	x
Corn, FOB France	USD 258/264 Mar/May	x
Sorghum, FOB Texas, low tannin, GMO free	USD  255/258 Mar/May	x
Sorghum, FOB Argentina port, high tannin, GMO free	USD  188/197 Mar/May	x

 

 

Soymeal,  48 protein, FOB NOLA	USD 554>>542 Apr>>May	x
Soymeal, 48 protein, USA, Rotterdam	USD 630>>593 Mar>>May	x
Soymeal, Argentina, Rotterdam	USD 625>>559 Mar>>Jun	x
Soymeal, 47 pro, FOB Argentina	USD 495>>490 May>>Jun	x
Soymeal, 48 protein, Brazil, Rotterdam	USD 610>>545 Mar>>Jun	x
Soymeal, FOB Brazil	USD 525>>472 Mar>>Jun	x
Soymeal, 48 protein, India FOB	USD 630/640	x
Soybeans, FOB NOLA	USD 566>>560 Mar>>May	x
Soybeans, Argentina, FOB	USD 517>>505  May/Jun	x
Soybeans, Brazil, FOB	USD 513>>500 Mar>>May	X
Soybeans, Rotterdam	USD 584>>572 April>>June	x
Soybeans, Black Sea	USD 550/570 Mar/May	x

 

 

Bulk vessel shipments, minimum 5000 m/t

 

Corn Gluten Meal, USA FOB NOLA	USD   920/930 m/t  Apr/Jun	x
Corn Gluten Feed, USA FOB NOLA	USD   240/245 m/t  Apr/Jun	x
DDGS, 35 profat, USA FOB NOLA	USD   305>>290 m/t Apr>>Jun	x
DDGS, 35 profat, CNF Asia	USD   370>>365 m/t Apr>>Jun	x

 

 

According to exporters in the US DDGS business, the volume of new order for DDGS seems to have fallen off in the past few days as the major buyers in Asia seem to be well covered for the next 3 or 4 months. Trade reports suggest that Asian buyers are now looking for prices out into the late US summer period.

 

US production of DDGS is quite good due to the demand for ethanol and is expected to remain high for the next 4 months or so as ethanol usage is normally high for the spring and summer months.

 

The US domestic shipment logistics problems are all finally getting solved as we come to the end of what was a very long and troublesome winter in the USA. Ethanol production is up by 10 percent or so over the same time in 2013 which means that DDGS production will also be higher.

 

The big question on DDGS will be China and what will happen to their import demand – will the demand for DDGS fall as is expected with soybeans or will a pending approval of USA GMO corn MIR162 swing China's imports away from DDGS to corn. These are all factors for future analysis.

 

Corn gluten meal and corn gluten feed are both higher this week. CGM is higher as all protein prices move up for April/May/June shipment while CGF is stronger on good domestic demand in the USA even while corn prices slide a little lower.

   

 

Container shipments, minimum 200 m/t

 

Argentina Meat & Bone meal, 45 protein	USD 430/450 m/t CNF Asia
Paraguay Meat &Bone meal, 45 protein	USD 430/440 m/t CNF Asia
Australian MBM 45 protein    Australian MBM 50 protein    Australian Feathermeal, 80 protein    Australian Poultry Meal, pet food	USD 620/640 m/t CNF Asia USD 670/690 m/t CNF Asia USD 860/870 m/t CNF Asia USD 1020/1040 m/t CNF Asia
USA Meat & Bone meal, 50 protein    USA Feathermeal, 80 protein    USA Poultry Meal, feed grade    USA Poultry Meal, pet food grade	USD 680/700 m/t CNF Asia USD 890/900 m/t CNF Asia USD 770/790 m/t CNF Asia USD 1000/1040 m/t CNF Asia

 

The following indications are at producer's factory, ex-works in bulk

 

Meat and bone meal, USA, 50 protein	USD 560/590 m/t
Feathermeal  80 protein USA	USD 740/760 m/t
Poultry meal  57 protein, Eastern USA	USD 610/630 m/t

 

Animal protein prices from Australia and New Zealand and pretty much unchanged this week but the USA export prices have all moved a little higher as they are pushed up by increased prices in the US domestic market. With vegetable protein prices moving higher it is very easy to understand why animal protein prices are being pulled higher.

 

International (Asian) demand for MBM and other animal proteins remains very strong but if the Chinese start to cancel some soybean orders that could lower vegetable protein prices and cause animal proteins to move lower.

 

We see that there have been some serious problems with pork traces being found in beef MBM in Bangladesh, this is the same problem as ended the MBM import business in Egypt a few years ago. The problem is due mainly to the source of raw materials for many of the renderers in South American and some Eastern European locations. While some renderers are associated with meat packing organizations and have a reasonable control of incoming raw materials, many renderers buy in their raw materials and have little or no idea of exactly what the content is. Independent renderers certainly do try to maintain all-beef as such but with limited input control there is a chance that some pork can slip into the beef stream, as is seen today in Bangladesh and as has been seen in other countries.  

 

 

 

SECTION 2 --- FISHMEAL COMMENTS AND PRICES: PERUVIAN

 

PERU "INDICATION" FISHMEAL PRICES:

 

As reported last week the Peruvian biomass research cruise continues and again this week the results seem to be very good, although nothing is official as yet. The possible El Nino event should not have any effect on the next fishing season but may have some effect on the later 2014 fishing season. However, some experts say that the El Nino has started already and that it could cause some problem with the fishing – but there seems to be no agreement among "experts".

 

With the possible El Nino there is some pressure on the Peruvian government to start fishing a little earlier but this currently does not look too likely a possibility.

 

The estimate of unsold stocks of fishmeal on hand in Peru are down to 15,000 m/t or less which is really the equivalent of zero stock and, what little there is, is selling at a very high price.  

 

So now we just have to wait to see what the new season's quota will be, when fishing will begin and what the possible effect of an El Nino event could be. At least we have a few things to ponder during this period of no new Peruvian fishmeal business. Of course, while there is little to sell, the producers are still shipping a good level of fishmeal as they finish off all the orders they have on hand from the last fishing period.

 

I should point out that when I mention stocks on hand it is always "unsold" stocks on hand – the level of physical stocks will always be much higher but most physical stocks are covered by previous sales and are not available for sale.

 

 

 ALL PRICES SHOWN ARE IN CONTAINER, ON VESSEL, AT ORIGIN --- US DOLLARS

Minimum shipment of 200 m/t for fishmeal

 

Specification	Price per m/t FOB vessel Peru port
65 protein	1420/1440 m/t
65/66 protein	1450/1460 m/t
67 protein standard steam	1520/1540 m/t
67 protein SD 150  TVN	1540/1550 m/t
67 protein SD 120 TVN	1560/1570 m/t
67 protein SD 1000 hist, 120 TVN	1580/1590 m/t
68 protein SD 500 hist, 120 TVN	1600/1610 m/t
Fish oil, crude bulk	1900/1950
Fish oil, crude drums	2100/2050
Fish oil, flexi tank	2050/2100
Fish oil, Omega 3: 28%EPA/DHA	2600/2700

 

INFORMATION:  gtee = guarantee, TVN = total volatile nitrogen, hist = histamine,

FAQ = fair average quality (normally flame or hot air dried), SD = steam dried

           

Wayne Bacon

 

The information contained herein is based on sources that we believe to be reliable, but we do not represent that it is accurate or complete. Nothing contained herein should be considered as an offer to sell or a solicitation of an offer to buy. All references to prices are subject to change without notice.  Any opinions expressed herein are solely those of the author.  As such, they may differ in material respects from those of, or expressed or published by or on behalf of, Hammersmith Marketing Ltd or its officers, directors, employees or affiliates

 

Copyright © 2014 Wayne S. Bacon