Inadequate supplies rev up China amino acids prices

 
An eFeedLink Exclusive

 

 

 

During the first week of August, as the summer heat continued to depress the feed intake of poultries, feed consumption remained low, decimating the usages of methionine. Prices, which have dropped 9% since late June, stayed flat as a result. However, prices climbed gradually in the following week, as several traders started to stand firm in view of expanding demand with the weather temperatures falling and broiler releases poised to increase due to pre-Mid-Autumn Festival demand. True to their expectation, poultry feed demand rose, lifting methionine consumption in tandem.

Prices of dl-methionine rebounded to the range of RMB35-40/kg, as eFeedLink has projected in June's article "China methionine market setting new norms". However, the rally did not stop after hitting the upper limit of the price range by late August. Other than improved demand, which was stimulated by the peaking of broiler and egg prices nearing Mid-Autumn Festival, the delay in the shipments of a global producer's import tightened the supplies in the market. The supply crunch was worsened by China producer Chongqing Unisplendour's extended production halt and global producers' limitation of output due to insufficient raw ingredients. Methionine prices skyrocketed, and by late-September, dl-methionine prices have skyrocketted by almost 300%, breaking 2008's record of RMB71/kg.

 

On a similar note, the demand for lysine and threonine grew during August when higher release volumes of hog and poultry perked up feed consumption. Daunted by tumbling livestock prices, hog producers and feed millers had maintained minimal feed stocks while usage was slow after June's Dragon Boat Festival. When the demand pork finally picked up in August, feed millers, who stepped up production and restocked depleted inventories of ingredients, were surprised to find that the availability of lysine and threonine was limited. And more important, producers had difficulties raising output due to insufficient corn in China. 

Threonine prices started to rise since late July, and by end of September, prices have gained about 70%, whereas lysine prices surged 18% during the last two months of Q3.

The only major amino acid product that had a weak showing was tryptophan. Between August and September, prices softened 5% as tumbling soymeal prices resulted in lower inclusion rates of tryptophan in feed formulation. 

 

 

Diminished livestock volumes will impede the demand for amino acids in October. In response to weaker demand, threonine and lysine producers will likely lower prices to entice buyers while corn supplies gradually expand. Tryptophan market will extend its weak trends with demand soft and supplies ample.

Nevertheless, methionine suppliers will stand firm amid supply shortages. Sharp spikes in prices are less likely, but unless more shipments arrive, prices of methionine are unlikely to retreat from record high levels.
 

Entering October, a month where feed consumption usually slows due to high livestock release volumes in previous months, the sales of feed additives will be weak. The winding down of aquaculture production due to falling weather temperatures will further impede the demand for feed and hence feed additives. Prices of feed additives are therefore set to stay flat or move lower, except for products that face severe shortages, for instance methionine and folic acid.