Last week I wrote about the exciting happenings in swine nutrition research. This week my comments are still about swine nutrition, but now I’m talking about upcoming ingredient price hikes and their impacts on diet formulation.
Soybean harvest has begun in southern Minnesota with a few fields harvested and combines expected to really begin rolling next week. The increasing availability of new crop beans to local processors has meant soybean meal prices have dropped from the $650/t price I wrote about 1 month ago to $362/t this morning in Mankato. As beans begin coming into processors this price is expected to drop further.
Local corn bids are now under $3/bu with bids in the Dakota’s approaching $2 in the coming weeks. I’ve heard of a $2.25/bu bid already.
All of this sounds like pork producers can breathe easy for the coming months as far as feed ingredient pricing and feed cost of gain. That isn’t the case.
If you use synthetic lysine (just about 100% of the US industry does), be prepared for a price shock when you book your next purchase. The majority of the L-lysine in the US comes from suppliers who use HCl (hydrochloric acid) in the manufacture of the product. Apparently the N Dakota fracking boom has resulted in a shortage of this acid and L-lysine producers (and other industrial users of HCL) are being forced to pay very high prices for this ingredient and in many cases being placed on allocation regardless of price. Within the next week it is expected that L-lysine will jump from $0.60/lb to at least $0.80/lb with further price hikes expected. It does appear that the suppliers of HCL will begin increasing supplies by year end so long term pricing and availability of L-lysine appears to be ok.
Evonik Industries (suppliers of Bio-Lys, a lysine co-product from the corn ethanol industry) have estimated that the world wide demand for lysine is increasing 7-10% per year. They estimate that about 25-30% of the L-lysine demand in the US is associated with DDGS usage in swine diets. This means a price hike in L-lysine may be the limiting factor on DDGS inclusion unless DDGS prices really drop in relation to corn.
Methionine has similar supply shortages, but for different reasons. Purchasers of methionine have been on allocation from major suppliers for some time due to limitations on manufacture of this amino acid. Evonik Industries is expecting a new plant to come on-line in November in Singapore to supply the Asian market. This will take pressure off of their Mobile, AL plant and should result in some loosening of this supply by next summer.
With high soybean meal prices this past month, many nutritionists adapted diets by aggressive use of synthetic amino acids. With cheap soybean meal prices and rising synthetic prices, suddenly we may be going back to corn-soy based diets for our pigs, especially if high synthetic prices limit DDGS inclusion levels. Does anyone remember feeding the simplicity of feeding corn-soy diets?
Please note that I was in error when I said Bio-Lys was a co-product of the ethanol industry. Bio-Lys is manufactured at Blair, NE at a plant that is associated with the Cargill wet milling ethanol plant. However, it does not use co-products from the wet-milling plant for Bio-Lys manufacture.