By Matt Schoenmaker
Purchaser in Production,
Grand Valley Fortifiers
September has been a month of change in the market. Many suppliers of various goods have seen increases in activity after a slow summer. This is likely due to many different companies holding greater volumes of product, working to use it up before bringing in new inventory. Recent news suggests that Chinese cost-of-production has increased on several ingredients, meaning that due to inflation and increased costs of raw materials, it is unlikely that we’ll see a drop of prices previously seen before the pandemic on several ingredients. With that being said, we have still seen several ingredients drop in the past month. Below is more ingredient specific information on downs seen across the market.
Overall, there has been a continued reduction in prices of amino acids over the past month. This is due to the delivery of ingredients spoken about earlier this year that were purchased at a lower value. However, we have already seen prices begin to turn and believe that prices could start to head up in the next few months. China is coming off a weeklong national holiday.
It will be intriguing to see how pricing changes in the next few weeks coming out of these weeklong plant shutdowns. We will need to watch both the energy situation in Europe and the world’s response with regards to energy prices. Earlier in the week, we saw OPEC decrease oil supply by two million barrels a day, which will signal energy price increases, and likely more pricing increases in the future. It is possible that we run into an energy shortage this
fall, causing cost-of-product to increase for several facilities, and potential supply limits on several products coming from overseas. This could have a large impact on several ingredients, including vitamins and amino acids. For the meantime however, producers will benefit from well-priced inventory. Vitamin B5 and Choline Chloride also saw strong decreases in price as demand
Other Macro-Economic Factors:
While many prices have dropped significantly, there are also some factors which have kept prices from dropping further. Recently, we have seen the Canadian dollar decrease in value quite sig-nificantly. This is due to two main reasons: the first being a strong US dollar, and the second being poor macro-economic numbers in Canada. These factors combined with strong inflation have caused our dollar to weaken impacting three significant ingredients, salt, dical, and sodium bicarbonate, all of which have seen minor increases in prices due to the exchange rate. Dical continues to sit at near record high prices as North American producers faced a 10% impact on supply after hurricane Ian hit Florida. China continues to face increasing pressure from several nations around the world with their political tone towards Taiwan. Nations such as the USA and Japan have recently put military ships in waters around the nation and we will be watching to see if and how shipping lanes could be affected by potential escalations. With many ingredients including amino acids, acidifiers and vita mins being manufactered in China, we will be watching this
situation closely to see if it could affect availability of product.
This article was written for the Fall 2022 Eastern Swine Grist. To read the whole Swine Grist, click the button below.