China Blamed for Feed Price Hikes Nov 15 2003
By David McCoy
INCREASES of ?6 per tonne on intensive diets and ?4 on ruminant diets are being predicted as raw materials for animal feed soar to 42 per cent above November 2002 levels.
Commodity prices have been rising fast over the last few months, driven mainly by Chinese demand, which continues unabated.
The failure of the grain and oilseed crops in western Europe, due to last summer's drought, has been exacerbated by the reduced size of the US soyabean crop.
Europe is seriously short of feed grains - mostly maize. In fact, France might have to import maize this year.
This shortage can only be met by maize from the southern hemisphere as the US corn crop includes varieties not authorised for import into the European Union due to their specific geneticallymodified component.
This problem also has to be very carefully monitored when buying corn from either Argentina, where it is mostly GM, and Brazil where it is mostly non-GM, but has a risk of contamination with GM maize.
Wheat is also in short supply; Europe has already exported nearly three million tonnes and has only imported 1.5 million tonnes. Although exports have now been stopped, it is difficult to see where the supply from outside Europe will come as the USA seems to be the only store in town.
On the demand side, the global story is all about China --in fact, this is true of all commodities, including metals. As a result, worldwide deep sea freight charges have also exploded, in the last six-eight they have virtually doubled. China is likely to slow its exports of corn this year, therefore driving up US prices as they have to supply the rest of Asia.
China is also reported to be buying up to two million tonnes of wheat - which is very unusual and dramatically changes the available supply picture for the rest of the world. On soyabeans, China is projected to import around 24 million tonnes this coming year and has already made serious purchases out of the US.
A trade source said: "When all of these factors are taken together, one begins to understand the reasons for the huge price movements in recent months. Prices today of the main raw materials for the feed trade are up 42 per cent from November 2002 (see graph of November 2003 soyabean prices).
This has meant that feed costs will rise. Intensive diets, relying primarily on wheat/maize and soyabean meal, are going to cost ?6 per tonne more than last year. Ruminant diets are costing ?4 per tonne more than last year."
Where will prices go from here?
The trade source said: "China remains the key; if the demand slows down then some respite might come but we have to remember that China is in the process of changing from a large agrarian society to a great industrial power. The population shifts from the rural areas to cities places more pressures on the Government for food. This, in turn, translates into demand for agricultural commodities and will tend to underpin prices.
"On the supply side, there are some serious concerns regarding price rationing of soyabeans, particularly as the USA could run out unless demand slows. How can demand slow? Ultimately only if animal numbers somewhere are reduced and we do not see any signs of this happening yet.
"The scene is set for a replay of the commodity price hikes of the early 1970s."
farminglife.com
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yeah, right, it is all China's fault. Why don't they just let their people starve to death? |
