On Tuesday of the early week, Brazil’s Foreign Trade Commission told that the government decided to remain the import tariff on ethanol products rather than raise tariff to 20% as plan due to the concern that this country might not take initiative in this material in the near future. Also according to this organization, the plan to increase the tariff was possible to be reviewed in next June. Brazil is currently the second biggest ethanol producer, after the U.S. But it is the biggest ethanol producer from sugar cane while the U.S. uses corn to be the principal material
Wheat
Also in the upward trend, by the end of Wednesday session (Feb. 24), CBOT May 2010 wheat price rose 24 cent against the last session of previous week and it was 21.55 cent higher than the average price of the previous week, reaching 513.75 Uscent/bushel. However, CBOT corn price stayed at 490 Uscent/bushel, significantly lower than the average price of Jan. 2010 of 521-522 Uscent/bushel.
Drought in China caused the loss for 3.56 million ha of cultivating area – the latest information from the Office of State Flood Control and Drought Relief Headquarters of this country in mid Feb. 2010. Dry weather and severely water shortage in many Southern areas of this country, from Yunnan and Sichuan province to Guangxi, Shaanxi (Thiểm Tây) and Shanxi (Sơn Tây) caused the total winter wheat area of these areas to suffer from water shortage for over 40 days. Local authorities had to quickly subsidize for the damaged areas about CNY 640 million totally (equivalent to US$ 94 million) to minimize the losses caused by the drought.
Although wheat volume in India’s stock currently are quite plentiful, transaction price of this commodity in most of localities in India was likely to increase due to the jointly impacts of other cereal, especially rice. According to the statistics on early Feb. 2010 of related organizations, wheat area in India rose slightly to 27.76 million ha from 27.59 million ha of the same period last year. With this area, India’s wheat production in 2010 was forecast at about 80.28 million tons, slightly down from 80.68 million tons of the previous year albeit remaining quite high.
According to the February report of India Grains Committee (IGC), the world’s wheat production in 2009 was adjusted to 668.3 million tons, 1.5 million tons higher than the previous estimations but significantly lower than the record 686.8 million tons in 2008. Also in this report, IGC told that during the past 2 years, worldwide wheat stock rose nearly 30% as well as caused this commodity price to drop from the peak of US$ 440/ton in Mar. 2008 to only US$ 206/ton in Dec. 2009, which was forecast to remain in at least one more quarter by several specialists.
2. Protein providing materials
Soybean – Soybean meal
Over the week, CBOT soybean and soybean meal price fluctuated slightly with unclear trends. By the end of Wednesday session (Feb.24), CBOT Mar. 2010 soybean price reached 955.5 Uscent/bushel, up over 10 cent against the session of the previous late week. Meanwhile, March soybean meal price only stayed at US$ 276.9/short ton, rising slightly US$ 0.5/short ton against the session of the previous late week albeit US$ 1.38/short ton lower than the average price of the previous week.
India is currently more advantageous in soybean meal export than the South America; however, this advantage is unstable and depends much on the weather conditions in Argentina. It has been consecutively raining in this South American country and adversely affected the soybean grinding, crushing and soybean meal processing. According to the data from some Indian enterprises, this country seems to export to Iran, Vietnam and Japan about 89 thousand tons of soybean meal in Feb. and the first half of Mar. with the average price, including freight of about US$ 403-423/ton – quite attractive price. However, the reasons to choose India’s commodity of Japan, Iran and Vietnam were not similar. While Japanese enterprises told that they preferred Indian non-genetically modified soymeal than the one of the South America and the U.S., Iran bought it just because of its more competitive price and its moderate protein content (India’s current soybean meal price was about US$ 15 lower than the one of the U.S.). Meanwhile, many buyers in Vietnam decided to choose India’s soybean meal just because of supply scarcity from Argentina and the U.S.
II. DOMESTIC MARKET
According to the latest statistics from General Department of Vietnam Customs, the total import value of animal feed and feed ingredients in Dec. 2009 was US$ 178.04 million, up US$ 36.86 million (equivalent to 26.11%) against Nov. 2009 albeit below US$ 3.12 million (equivalent to 1.72%) against the same period of 2008. With this figure, the import value of Vietnam’s feed industry in 2009 totaled US$ 2.15 billion, down over US$ 263 million (equivalent to 10.92%) against the import value of entire 2008. By categories, soymeal was still the commodity with highest proportion of 47.39% (up nearly 5% of proportion against 2008). The next was finished feed (accounting for 14.09% of proportion), corn (accounting for 13.96%) and fish meal–bone meal (accounting for 13.04%).
1. Calories providing materials
Corn
Over the week, corn price suddenly rose slightly VND 100/kg to VND 5,300/kg due to the upward price trend of substitute ingredients.
Bran – Cassava
Meanwhile, cassava price suddenly rose sharply VND 250/kg to VND 4,600/kg. The price increases because domestic main cassava crop was over, therefore many enterprises had to accept high buying price due to cassava shortage. Purchasing power from some Chinese buyers also contributed to pushing up cassava price.
2. Protein providing materials
Soybean meal
Over the week, import soybean meal price did not much change. In particular, import price of Indian soymeal at Sai Gon port (CNF) remained at US$ 450/ton. Import price from the U.S. was a bit lower, reaching US$ 440/ton; however, enterprises were not much interested in this supplier as the delivery was slow and often delayed in the recent time.
Vietnam’s soybean meal import from India in Dec. 2009 reached US$ 46.64 million, up slightly US$ 0.13 million against the previous month and accounted for 51.89% of proportion. Therefore, it was the fourth consecutive month that this commodity import value from India prospered and accounted for over 50% of the total imports worldwide after the downward trend in mid 2009. Meanwhile, soybean meal import from Argentina was completely contradictory. Vietnam’s soybean meal import value from Argentina in quarter 4, 2009 totaled only US$ 21.99 million, sharply down 88.8% against quarter 3, 2009 and down 68.9% compared to the same period of 2008. Delivery delay from the South American countries and the U.S. often happened in the late months of 2009, mainly resulting from the adverse weather caused Vietnamese enterprises to accept using Indian commodity despite the fact that the quality and protein content of this commodity is not high-appreciated.
3. Affecting factors
Market on the move
Thailand forecasts that demand for feed ingredients of this country in 2010 will remain significantly higher than 2009 because cattle density rises sharply to meet its domestic meat demand as well as cater for booming food and meat export target in 2010. Specifically, the total broken rice consumption of livestock industry is forecast to be about 720 thousand tons, up 20 thousand tons against 2009. Similarly, demand for corn, soybean meal and fishmeal rises 70, 50 and 10 thousand tons, respectively against 2009 to 3.26 million tons, 2.26 million tons and 180 thousand tons.
III. PROSPECT FOR MARKET
The U.S Department of Agriculture has just released its ten-year outlook (2010-2020). Generally, stable growth rate and high speed of rising price are forecast as common trends of the entire industry in the next 10 year period. Global economic recovery with steady growth may be considered as important factor, contributing to reinforce the demand for most of agro-products. Particularly corn, although its growth speed of ethanol industry from corn of the U.S. could not be high as in the past years; the U.S. corn demand is forecast to remain strong by the USDA.
In some coming years, it is possible that the U.S. livestock industry will have to be adjusted to decline after the price storm in 2007/08. Moreover, the consumption is unable to completely recover right after economy recession; and this phase is forecast to last by the end of 2011. Particularly, average meat consumption volume per capita in the U.S in the period of 2004/08 was about 100 kg/person/year, subsequently dropping to 93 kg/person/year in the years of 2009/2012 and it is forecast to recover at 97 kg/person/year by the end of 2019. With the new forecast from USDA, prices of all feed ingredient varieties may be unable to rise sharply, at least by the end of 2010.
At present, Vietnam is in main shrimp season (often lasting from December of the previous year to April of the following year), leading to quite high consumption of all shrimp feed varieties. In addition, domestic catfish price is likely to rise sharply against the time before Tet holiday. Specifically, catfish price rose about VND 700-800/kg (equivalent to 5.06%), shrimp price up about VND 20,000/kg (equivalent to 15-17%) against Tet’s one month earlier. Therefore, the raisers speed up rising the population; and according to Agromonitor, demand for animal feed as well as feed price is predicted to rise simultaneously.
APPENDIX
INTERNATIONAL MARKET
Animal feed ingredients in Chicago futures market
|
Date
|
Corn
|
Soybean meal
|
Wheat
(US cent/bushel)
|
|
(Uscent/bushel)
|
(USD/short ton)
|
|
15/2/2010
|
361.50
|
280.00
|
486.50
|
|
16/2/2010
|
367.25
|
280.00
|
505.00
|
|
17/2/2010
|
360.00
|
279.40
|
494.75
|
|
18/2/2010
|
357.25
|
275.60
|
485.00
|
|
19/2/2010
|
360.00
|
276.40
|
489.75
|
|
22/2/2010
|
371.50
|
281.70
|
515.25
|
|
23/2/2010
|
367.75
|
279.60
|
505.75
|
|
24/2/2010
|
375.25
|
276.90
|
513.75
|
Source: Chicago Mercantile Exchange Group