China grain import regulation
Last week Expana heard from the market players that China’s National Development and Reform Commission (NDRC) recently issued new guidelines regarding grain feed imports, sparking rumors of a potential import ban for feed in Q4 2024. The NDRC met with state-owned enterprises, such as COFCO, State Investment, C&D, China International Trade, and Xiangyu, instructing them not to sign any new contracts for the remainder of the year. These discussions primarily focused on barley and sorghum, as imports of corn and wheat in bonded zones are already restricted, with quotas in place for imported corn and wheat. According to market sources, the key measures from the NDRC include restricting purchases to last year’s total import volume (any excess will require adjustments), prohibiting new purchase contracts, and increasing customs inspections on imports that have not yet been purchased. While this is not an outright ban, the Chinese government aims to control grain import volumes for the rest of the year to support domestic grain prices, which are currently near multi-year lows. For now, state-owned importers are likely to remain inactive, but private importers are not yet affected by these new regulations. However, the situation is still evolving, and it remains to be seen if these measures will eventually impact private enterprises.
Overall market player’s current price sentiment is rather mixed, with a slight bearish tilt due to robust wheat production forecasts in the US and Russia, despite support from a weaker US dollar and poor French harvest.
Argentinian farmers likely to increase soybean planting instead of corn
According to market sources, Argentinian farmers are likely to plant more soybeans instead of corn for the 2024/25 season. The projected increase, estimated to be an additional 2 million hectares, is attributable to favorable weather prospects for soy and following the leaf hopper plague that impacted last season’s corn harvest. While the Rosario Grains Exchange has not given its official soy planting area forecast for August, the agency cut its 2024/25 corn planting area down by 21% from estimates in July. Market players opine that the potential shift to corn planting could boost global supplies when prices are low. However, logistical constraints, with low water levels in the Parana River, and economic conditions will also be watching points for the Argentinian market. Market sources have reported that current low global soybean prices, high export taxes and current costs of inputs are squeezing farmer revenues, leading to negative margins. Meanwhile in Brazil, the country’s National Association of Cereal Exporters (Anec) lowered its August soybean export forecast to 7.74 million metric tonnes, down from last week’s projection of 8.16 million metric tonnes.
EU wheat milling quality concerns remain the key focus for market players
Wheat quality remains a concern in the EU market. According to FrenchAgriMer, the soft wheat crop in France has been affected by rain, resulting in milling quality falling below the average in recent years. A survey conducted with crop institute Arvalis indicated that only 26% of the 2024 crop achieved a test weight above the standard 76kg/hl, a notable decline from the 2019-2023 average of 76%. Regarding protein content, 74% of the crops had a protein content above 11%, down from the five-year average of 85%, while only 43% of the crops exceeded 11.5% protein, a threshold crucial for several key importers. Germany is facing similar wheat quality issues, and the production seems to be lower than initially expected by market players. Currently, market participants are pegging German 2024/25 wheat production at 18-19 million mt, slightly lower than the German Association of Farm Cooperatives (20.2 million mt).
Additionally, the outlook for the 2024/25 wheat harvest in Ukraine is causing concerns. An Expana source noted, “This season’s wheat harvest appears to be poor. Last season, the quality of wheat was very low, with around 70% of the crop having a protein content below 10.5%, making it suitable primarily for animal feed. This season, we expect around 50% of the wheat to have a protein content of about 11.5%. Also, farmers have sufficient storage capacity, hence, they are not in a rush to sell and fixate on the prices.”
In Russia, domestic wheat prices reached their highest point since May, driven by strong demand mainly from livestock farms, feed manufacturers and a weaker ruble, according to market sources. However, producers are withholding sales as they expect prices to rise further. Export demand for Russian wheat continues to be relatively strong but the recent stabilization of port prices may suggest a slight decline in demand. According to market participants, Russia is estimated to export approximately 4.4-4.5 million mt of wheat in August. Russia’s 2024/25 wheat harvest is facing significant challenges. The Volga region, a key wheat-producing area, has been described as a “disaster” due to adverse weather conditions. Persistent rain in other regions is also hindering the harvest and reducing overall yield potential. Consequently, market players are revising their production estimates downward, with some now predicting a harvest below 80 million mt. However, the outcome will depend on the progress of the ongoing harvest.
Evonik completes Singapore DL-methionine production capacity expansion
Evonik today held a ceremony to mark the completion of its DL-methionine capacity expansion at its site on Jurong Island, Singapore, from 300,000 tonnes/year to 340,000 tonnes/year. The increase in production capacity required a high double-digit million-euro investment, Dr. Jan-Olaf Barth, the former head of Evonik’s Essential Nutrition product line, said in March 2023 when the expansion was originally announced.
ForFarmers and team agrar enter new feed JV in Germany
ForFarmers and team agrar, part of the DLG Group, have announced they will combine their feed operations in Germany by establishing a 50/50 joint venture (JV) called “ForFarmers team agrar”. The JV will include ForFarmers’ feed activities in Germany, with approximately 250 employees, and team agrar’s feed activities in Germany, which has approximately 130 employees. ForFarmers team agrar will operate eight feed production sites, three terminals, and a vehicle fleet. HaBeMa, a trading JV with 130 employees and compound feed production in Hamburg, which ForFarmers and team agrar already operated before this announcement, will also be part of the new JV.
Pieter Wolleswinkel, CEO ForFarmers, said: “We have worked well with team agrar and DLG Group for many years in our joint venture HaBeMa. I believe joining forces is a great step forward for both parties to extend our market activities in Germany. It will lay a foundation for further growth in an important region for ForFarmers in Germany. This partnership will enable us to enhance our product portfolio to provide local solutions and services to the German market.” Bent Nissen, Managing Director of team agrar, added: “We are taking this very important strategic step to future-proof our feed activities. The partnership signifies our commitment to strengthening the value proposition to our customers by bringing them best-in-class products and services. At the same time, it allows us to leverage synergies, boost competencies, and offer our colleagues new opportunities and perspectives.”
Excluded from the new agreement are the activities in Germany of the ForFarmers’ brands ForFarmers Thesing, Pavo, Reudink, CirQlar and Vleuten as well as DLG Group’s nonfeed agrar activities, organic feed, Vilofoss activities, construction and energy activities in Germany.
Nearly 70 horses die in Oklahoma after consuming monensin-tainted feed
The Buetler & Son Rodeo Company based near Elk City, Oklahoma, recently lost up to 70 horses after the animals consumed feed containing the antibiotic monensin, according to local news reports. “We didn’t know what was going on, we just got the feed and started feeding it like always,” company co-owner Rhett Beutler told KFOR-TV. “Then all of a sudden looked up and there were horses just falling over, dying.”
According to a statement, the Oklahoma Department of Agriculture, Food and Forestry (ODAFF) was alerted to a potential issue involving Buetler & Son’s horses being affected by a feed order on 23 August. ODAFF stated that the feed originated in Kansas, adding that it is also working with the Kansas Department of Agriculture to investigate.
In a social media post on 1 September, Livestock Nutrition Center LLC— a feed manufacturing and grain handling company with locations in Kansas, Missouri, Oklahoma, Arkansas, and Texas— shared a letter signed by its president, Dr. Ronnie Castlebury. The company indicated that preliminary tests showed that a batch of feed delivered to Buetler & Son contained monensin, which can be toxic for horses. “This likely occurred due to a combination of a failed cleanout procedure and a sensor malfunction. We have confirmed that this is an isolated incident to this single load of feed from a single facility and no other feed has been impacted and is safe for animal consumption,” the letter stated. Livestock Nutrition Center added that it is working with the FDA and the state departments of agriculture in Kansas and Oklahoma to investigate the root cause of the contamination.
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