AMINO REPORT

November 2019

Indication Prices

(average cost and freight to Durban)

L-Lysine HCI

ZAR 15,95

L-Lysine sulphate

ZAR 10,08

L-Methionine

ZAR 30,34

L-Threonine

ZAR 15,92

L-Tryptophan

ZAR 85,76

L-Valine

ZAR 44,93

L-Arginine

ZAR 100,27

Headlines

China and South East Asia

  • BULOG (Badan Urusan Logistik), Indonesia’s national food logistics agency, is likely to not utilise its permit to import 30 000 tonnes (t) of beef from Brazil this year. This is largely due to an adequate domestic supply resulting from imports from other countries. Indonesia authorised 10 Brazilian meat-packing plants for imports earlier this year as well as issued permits to ship 50 000 t of frozen beef.
  • During Archer Daniels Midland’s third-quarter conference call, Juan Luciano (chief executive officer) said African swine fever (ASF) is forcing some Asian livestock farmers to recalibrate by switching from pig production to raising chickens. It is expected to increase the demand for higher-value feed mixes moving forward.
  • China has lifted the ban on imports of poultry and poultry products from Spain and Slovakia after determining that bird flu was no longer present in those countries. The bans, in place since 2016, were lifted on the 31st of October.
  • China plans to reduce the number of small-scale slaughterhouses to better prevent and control ASF. These small slaughterhouses are considered high risk as they are often old facilities with obsolete equipment, outdated production techniques, and substandard quality control protocols.
  • The spread of ASF in China continues to push up prices of every other protein. Recent market reports are showing egg prices have risen 43% since the start of the year and points to another, showing the volume of chicken purchased this year has more than doubled. Some companies are shopping for pork overseas to try to fill Lunar New Year demand. Pork prices in China have more than doubled in recent months.
  • China will resume imports of Canadian beef and pork, some four months after Beijing blocked shipments amid an escalating diplomatic feud between the two countries.
  • China and France have signed contracts totalling around USD 15 billion. Deals were struck in the fields of aeronautics, energy and agriculture, including approval for 20 French companies to export poultry, beef, and pork to China.
  • More than 4 000 pigs have died after an outbreak of swine fever in the Indonesian province of North Sumatra. According to preliminary estimates, Indonesia produced 327 215 t of pork meat last year, with the Hindu enclave of Bali producing the most. North Sumatra produced 43 308 t last year.
  • China detected ASF in piglets being illegally transported in its south-west city of Chongqing. The virus was found in 25 piglets in a truck in Dianjiang county.
  • An extensive, rapid slaughter of hogs to control an outbreak of ASF has sparked concern over whether South Korea is disposing of culled animals in the correct manner, following reports of pig blood present in river water. Authorities have slaughtered about 380 000 pigs since the outbreak was reported in September to contain the disease, all in a northern region bordering North Korea. That is about 3% of the country’s pig herd, for a total of 14 confirmed swine-fever cases. No new case has been found since 10 October.
  • Taiwan has reported an outbreak of highly pathogenic avian influenza at a plant in Puzi, resulting in the death and culling of 3 000 chickens, according to the World Organization for Animal Health (OIE). The OIE reports that the source of the disease is unknown, but the birds on the farm were placed under quarantine and the facility deep cleaned. The timing of this report comes after the United States (US) and China reached a deal for China to allow US poultry back on its shores earlier this month, after being banned since 2015 due to US bird flu issues.
  • Reports released this month indicate that Asia’s food and agriculture industry will need investment of up to USD 800 billion over the next 10 years to meet the region’s growing food demand. Investments will unlock annual market growth of around 7%, with the region more than doubling its spending on food to more than USD 8 trillion by 2030. Asia’s growing population and rising incomes are resulting in higher demand for protein-rich foods that require investment in expanding food supply chains.
  • China’s inventory of breeding sows rose 0,6% in October for the first monthly increase since April 2018, signalling that pig production may soon start to recover after the devastating epidemic of ASF. The decline in the pig herd is also slowing. The epidemic has cut the country’s huge pig herd by more than 40% and triggered soaring pork prices and food inflation. The pig herd fell by 0,6% in October, easing from a 3% fall the previous month, and the smallest month-on-month contraction in a year.
  • China’s pork imports in October doubled from a year earlier, as wholesalers stocked up on supplies. October arrivals came to 177 426 t, up from the previous month’s figure of 161 836 t. Pork imports for the first 10 months of the year stood at 1,5 million tonnes, up 49,4% from the corresponding period a year earlier. The data is for muscle cuts and does not include offal and other non-muscle parts known as variety meats.
  • China’s commerce ministry expects imports of pork and pork by-products to exceed 3 million tonnes this year, while total meat imports will be more than 6 million tonnes.

Headlines

Europe

  • Expokhleb will be hosting the 25th International Industrial Trade Fair, “MVC: Cereals – Mixed Feed – Veterinary 2020” at the Exhibition of National Economy Achievements (VDNH) in Moscow, Russia. The event will be taking place from 28 to 30 January 2020. The exhibition is organised by Expokhleb with the support of the International Feed Industry Federation (IFIF), the European Feed Manufacturers’ Federation (FEFAC), as well as professional associations in Russia.
  • Swine fever has been detected in two pigs in the country of Moldova, leading to the culling of 28 other pigs, which seems to have contained the situation.
  • The European Union (EU) has made plans to allow more United States (US) beef imports into the EU, which is likely to ease transatlantic tensions. Members of the parliament’s international trade committee voted 26–7, with four abstentions, for an agreement that will see US farmers take up the majority of an existing 45 000 t allotment. If approved, increased shipments of US beef should start at the beginning of 2020. The agreement on beef is designed to settle a dispute that dates back to 1981, when the European Union banned the use of growth hormones in meat across the bloc, including in imports. The EU and the United States eventually concluded an agreement in 2009 to grant a quota for hormone-free beef imports, which currently stands at 45 000 t.

The Americas

  • Consumer groups have rallied against certain restaurant chains for failing to reduce antibiotic use in their beef supply, despite already successfully doing so in the poultry industry. Chains like Arby’s, Pizza Hut, and Sonic get an ‘F’ for having no antibiotic reduction plan, while Subway and McDonald’s get middling grades for outlining plans but not yet making significant progress. Chipotle and Panera are the models, with neither serving any beef produced with the help of antibiotics. The drugs have been targeted due to fears that overuse hastens the development of antibiotic-resistant bacteria that can sicken and kill humans.
  • The US is developing response and recovery plans to combat the possible spreading of ASF to North America. Dr Dave Pyburn, vice president of science and technology at the National Pork Board, said his industry is extremely worried about ASF and its eventual spread to North America. According to estimated calculations, if this was to take place, it would cost the US pork sector USD 8 billion in only one year. Dr Pyburn also mentioned that porcine reproductive and respiratory syndrome (PRRS) is the most expensive disease for the US pork industry and leads to more preventive use of antibiotics. The US exports 5,3 billion pounds of pork, about 25% of its production.
  • The blows continue to fall on US farmers with excessive rains and an October snowstorm having stalled the harvest in the grain belt’s northern tier; this on top of the already disruptive trade war that has pressured commodity prices. The corn and soybean harvests are especially delayed in North Dakota and Minnesota, precisely the states suffering the most from the US–China trade war due to their reliance on exporting to Asia through west coast ports.
  • The United States Department of Agriculture’s Animal and Plant Health Inspection Service (APHIS) confirmed three additional cases of virulent Newcastle disease in San Bernardino County, California.
  • Delays in Brazil’s soybean planting due to scarce rainfall may affect sowing of the country’s second corn crop, which is planted after the oilseed is harvested and represents about 73% of the South American output. Soybean planting is currently at 46,9% of the expected area for the 2019/2020 season, way below the 61,6% level seen at this time last year, and lower than the 49,2% five-year average.
  • Brazilian exports of beef and cotton reached all-time highs in October. According to detailed government data for the country’s commodities exports, Brazil shipped abroad 160 100 t of fresh beef (in natura) in October. Cotton exports in the same month reached 273 400 t.
  • The Brazilian government has stated that China has approved seven meatpacking plants in the state of Santa Catarina for the export of pork innards. Exports can begin immediately. Seara Alimentos Ltda, a company of the JBS S.A. group, was one of the first to conclude its negotiation for the sale of pork innards. According to a JBS statement, Seara has closed a shipment of 400 tonnes.
  • Thirteen meatpacking plants in Brazil have been approved for exporting meat products to China, as the South American nation seeks to remain one of China’s main food suppliers. The approvals come as China deals with fallout from ASF. Meatpacking firm BRF S.A.’s pork plant in Lajeado is one of the units approved by China. That plant has capacity to process 5 000 head per day.
  • Brazilian farmers have begun drawing up plans to campaign the end of a ban by trading firms on buying soybeans from parts of the Amazon rainforest cleared after 2008. The push to end traders’ voluntary ‘soy moratorium’(one of the farm industry’s most high-profile efforts to preserve the Amazon) comes despite the mounting global pressure on Brazil to protect the environment from its expanding farm frontier.
  • The Brazilian government has stated that Saudi Food and Drug Authority has approved eight Brazilian beef exporting plants, as the two countries seek to boost business ties. The approvals come on the heels of an official visit to Saudi Arabia by President Jair Bolsonaro last month.
  • The US feed grain sector is currently going through a lot of volatility and trade barriers. There is also concern that the quality of grain in the US is going to be at its lowest level in five years. However, not all feed grain issues are just weather-related as trade tensions are expected to keep on creating uncertainties in the market
  • Argentina has sent its first shipment of chilled pork to China. The shipment included 26 t of pork cuts.
  • Brazil’s famous barbecue is getting more expensive as Chinese demand is increasingly swallowing up the country’s beef supply, pushing Brazilian cattle prices to a record high. China’s hunger for foreign meat has shot up as an outbreak of African swine fever has decimated its domestic pig population and has sent it looking for substitutes. Chinese imports of Brazilian meat are up 23,6% for January to October, against the same period last year. Wholesale beef prices in the greater Sao Paulo area have consequently hit an all-time high of USD 1,50 per pound. That’s feeding through and having an impact on consumer prices. Beef prices have risen 36,4% this year in São Paulo.
  • Brazilian corn exports are forecast to reach a record of 41 million tonnes in 2019, bolstered by a weaker local currency and favourable Chicago prices after bad weather affected the US crop. If confirmed, Brazilian exports will have grown by 80% from last year’s level of 22,8 million tonnes. The previous Brazilian corn export record was set in 2015, when the country exported 30,7 million tonnes.

Markets

  • World food prices rose for the first time in five months in October, boosted by jumps in quotations for sugar and cereals. The Food and Agriculture Organization of the United Nations (FAO) food price index, which measures monthly changes for a basket of cereals, oilseeds, dairy products, meat and sugar, averaged 172,7 points in October, up 1,7% on the previous month and 6,0% year-on-year. The FAO also predicted that cereal production would be 2,704 billion tonnes in 2019, slightly lower than its last forecast. The FAO sugar price index jumped 5,8% from September levels, largely because of expectations of lower supplies in the year ahead following forecasts of large reductions in sugar output in India and Thailand. The cereal price index rose 4,2%, with wheat and maize export prices climbing following reduced crop prospects in several major producing countries. Rice prices fell, hit by subdued demand and expectations of an abundant basmati harvest. The vegetable oil price index increased 0,5% to reach its highest level in more than a year, while the meat price index rose 0,9%, driven by higher import demand especially from China. The dairy price index dropped 0,7% in October, as lower quotations for cheese offset increases in those for skimmed and whole milk powders. The FAO lowered its forecast for global cereal production in 2019 by some 2 million tonnes, pegging world cereal output at 2,704 billion tonnes, but still up 1,8% from 2018 levels. Worldwide coarse grain production in 2019 was seen at 1,425 billion tonnes, down 1,3 million on the previous forecast. Wheat output was seen at 765 million tonnes, down nearly 1 million tonnes on the outlook. The forecast for global rice production was put at 513,4 million tonnes.
  • World meat production is expected to decline in 2019 for the first time in more than two decades, mostly resulting from ASF that has decimated Asia’s pig population. Production of bovine, ovine, poultry, and pig meats are forecast to total 335 million tonnes in carcass weight equivalent, 1% lower than the previous year.
  • According to the United Nations food agency, ASF will cut pork output in China for the remainder of 2019 by at least 20%, which is double the expected decline predicted six months ago. With the disease also spreading to neighbouring countries, notably Vietnam, Laos, Mongolia and Cambodia, the FAO expects world pork production to fall 8,5% this year to 110,5 million tonnes (carcass weight equivalent). The World Organisation for Animal Health (OIE) forecast last week that ASF would spread further across Asia where it has devastated herds. It said no country is immune from being hit by the deadly animal virus.
  • The trend of rising pork prices worldwide is being offset by the record pork production in the US. Pork prices have hit record highs in some regions, while trade barriers continue to limit the upside in the US and Canada. However, Canada’s deal reached with China may open the floodgates for Chinese demand. For the US, the question remains on how much more the herd could grow to account for Chinese demand, should trade barriers be soon removed.
  • Brazilian meat giant Marfrig Global Foods is looking to gain strong profits from a well-timed bet on US beef. Marfrig acquired the fourth largest US beef processor National Beef for USD 969 million in mid-2018, just ahead of events that have boosted beef profits, namely the spread of ASF across Asia, tightening US cattle supplies, and a fire that closed a Tyson Foods Inc. beef plant and constrained US processing capacity.
  • Pilgrim’s Pride Corporation says its third quarter sales to Mexico, one of the biggest consumers of US-sourced meats, were stronger than last year. Chicken prices are expected to rise going forward, mostly due to the Chinese government’s lifting of a ban on fresh poultry imported from the US.
  • Archer Daniels Midland (ADM) is continuing to target the growing demand for meatless burgers, which has helped give the agricultural conglomerate’s ingredients business a boost as ADM’s other divisions struggle with the US–China trade war. The Chicago-based grain merchant is using two of its plants to produce ingredients for plant-based meat alternatives, and in August struck a deal with Brazilian meat giant Marfrig to develop beef-mimicking plant proteins and other ingredients. Earnings in ADM’s flavourings and speciality ingredients division jumped 27% to USD 102 million in the third quarter.
  • Pork production, and meat production in general, is expected to grow in North America, South America and Europe in 2020, says Rabobank. This growth in production is expected in reaction to the continued spread of African swine fever in China and South East Asia and looks to incentivise beef and poultry production as well. Standouts include European poultry exports growing by 4,2% in 2020 amid dark meat demand in Africa and Asia, Brazilian beef production growing 3,5% in 2020, and US and Mexican pork production growing 4,6% and 4,1% in 2020, respectively, Rabobank says. Live cattle futures on the Chicago Board of Trade (CBOT) are down 1,1%, while hog futures are down 1%.
  • China continued its purchases of US soybeans, pork and beef even as negotiators struggled to hammer out details of the first phase of a potential trade deal between the two countries. The US Agriculture Department (USDA) has stated that China agreed to buy 568 573 t of soybeans in the week ending 14 November, down from 760 527 t a week earlier. Soybean shipments headed to China during the week rose to 873 573 t from 693 527 t. The world’s top oilseed purchaser has been a steady buyer of soybeans since the marketing year began on 1 September and committing to buying 8 476 million tonnes as US trade negotiations between the two countries have dragged on. That compares with just 647 990 t during the same period of 2018 but was well below the 18 647 million tonnes it agreed to buy between September and mid-November of 2017 before the trade war began. China has also stepped up its purchases of US pork and beef amid an outbreak of African swine fever that has devastated the country’s hog herds and caused a protein shortage. The USDA said that weekly pork export sales to China totalled 39 466 t, with the bulk scheduled to be shipped in 2020.
  • Following the announcement last week that China would be allowing poultry imports from the US, the country’s position on the import of feed-grade poultry ingredients has now been clarified. In effect, the ban has only been lifted for products for human consumption, and restrictions on feed-grade poultry products (for example, pet food with poultry ingredients) remains in place.

Corporate headlines

  • ED&F Man Liquid Products and premixer Vimifos have announced the creation of Nutrición Líquida de México, a joint venture company. Nutrición Líquida de México will focus on developing the liquid livestock nutrition supplement market in Mexico.
  • Cargill has opened a USD 34 million expansion of its animal nutrition and health facility in Temple, Texas. Construction of the 70 000 square foot (6 500 m2) addition for manufacturing, packaging, warehousing and shipping capabilities began in January 2018 and was completed in August 2019.The Temple, Texas facility is optimally located to serve Cargill’s farm and ranch feed store owners and beef feed customers with reduced transportation costs for local customers coupled with increased manufacturing capabilities.
  • Cargill has completed the acquisition of Brazilian piglet feed company Beckers Indústria de Nutrição Animal Ltda. The purchase, including an 8 000 t per month factory in Quatro Pontes which employs 60 people, was approved by the Brazilian competition authorities and the integration process is already underway. Cargill maintains that control of Beckers will allow it to offer better customer service across the country and expand its offerings of complete piglet feed.
  • United Arab Emirates poultry producer Al Ain Farms is currently building a new hatchery, which will include incubation technology provided by HatchTech. The new hatchery will further expand Al Ain’s day-old production capacity by an extra 13 million eggs a year initially, and by 22 million eggs a week in a second phase of the project.
  • Symrise AG has announced that it has successfully completed the acquisition of ADF/IDF, a leading US meat and egg-based protein specialist and pioneer in all-natural nutrition ingredients. The acquisition has been cleared by the antitrust division of the US Department of Justice (DOJ). Symrise will now begin the process of integrating ADF/IDF.
  • Raw pet food maker, Carnivore Meat Company, has announced expansion plans that will see the firm boost production of its frozen and freeze-dried products by 70%.
  • Marubeni Corporation’s chief financial officer Nobuhiro Yabe has confirmed that the Japanese trading house has no plans to sell its US agribusiness unit Gavilon. Marubeni’s agribusiness profit in the April to September period fell from a year earlier due to a loss of 3.9 billion yen (USD 35.85 million) related to inappropriate recognition of Gavilon’s loss from its trade in Italy and Spain in the last business year. Yabe said the Japanese company expects Gavilon to contribute about USD 70 million in profit to Marubeni’s earnings this business year.
  • Smithfield Foods Inc.’s slaughterhouse in Virginia was previously focused on carving up pork for local American lunch and dinner plates, but workers are now in the line of boxing up pig carcasses to ship to China. The transformation at the Smithfield plant shows how the global meat industry is adapting to profit from the ASF epidemic that has swept across the Asian continent. Bought by China’s WH Group Ltd six years ago for USD 4.7 billion, Smithfield Foods has retooled US processing operations to direct meat to China.
  • METEX NØØVISTA, a subsidiary of France’s METabolic EXplorer (METEX) has confirmed that the construction of a new butyric acid (BA) production unit in Carling Saint is progressing according to plan. The construction plans are on course to be completed by 2020. The new butyric acid plant will have an initial annual capacity of 1 000 tonnes.
  • Kemin Industries Inc. has announced the opening of a new USD 14,2 million innovation and technology centre at its regional headquarters in Zhuhai, China. The 4 200 m2 facility will boost its research and development activities in the country and will cover animal and human nutrition and health, pet food, aquaculture, speciality crop improvement and other industries that Kemin serves.
  • Koch Foods and local leaders in Etowah County met to announce that the company plans to invest more than USD 50 million to establish a state-of-the-art grain storage and distribution facility in Attalla. Koch Foods said the new poultry feed-mill will create 28 new jobs with an annual payroll of USD 1 million.
  • Verde Farms, the leading US provider of 100% grass-fed, free-range, organic beef, announced the opening of its own processing facility in Mullica Hill, New Jersey. This marked a major milestone for the company, the opening signals Verde’s enhanced capability to process its premium products in-house, while also offering advanced processing services to a select number of speciality meat customers. Following ongoing market growth and expansion of robust customer support services, the new facility underscores Verde Farms’ leadership position in grass-fed beef. In its USDA Organic and level 2 Safe Quality Food-certified facility, Verde will now process both frozen and fresh material into a variety of vacuum-packed products using the latest state-of-the art, highly-automated process and packaging equipment.
  • China’s state-owned agriculture conglomerate China Oil and Food Corporation (COFCO) has agreed to buy USD 100 million worth of pork from top European pork producer Danish Crown by 2020, to help plug a domestic pork shortage following the decimation of Chinese pork supply by ASF.
  • Seaboard Corporation has acquired Continental Grain Company’s shares in ContiLatin del Peru (CLDP). CLDP has been a joint venture between Continental Grain and Seaboard since 2007. Initially founded as a trade and import business, CLDP has grown into an industrial operation, with plants in Lurin and Trujillo which are engaged in grain processing, soybean extrusion, and animal feed production.
  • IMCD N.V., a distributor of speciality chemicals and feed/food ingredients, has announced that it has completed the integration of the E.T. Horn Company into its IMCD US operations. Horn was acquired by IMCD in August 2018. Horn was established in 1961 and is a speciality chemicals distributor in the US, with a focus on the west and south West regions. Its offerings in the animal nutrition sector include vitamin and mineral premixes, omega-3 fatty acids, speciality hydrocolloids, feed ingredients including starches, proteins, and fibres, and other ingredients for texture, enhanced nutrition, stability, and ease of processing.
  • JBS announced that its subsidiary, Seara Alimentos has entered into an agreement to acquire Frigorífico Marba Ltda, a cold cuts and sausages business based in São Paulo. The acquisition is in line with the company’s strategy to increase the share of higher value-added and branded products in its portfolio. Marba is reported to have annual revenues of around USD 85,7 million.
  • Elanco Animal Health has announced plans to acquire Bayer’s Animal Health business for USD 7,6 billion. Though subject to regulatory approval and other customary closing conditions, the deal is expected to close in mid-2020.The combined entities will create the world’s second largest animal health company.
  • South Africa’s Tiger Brands is exploring the possibility of selling off its processed meats business. This division was struck with a heavy blow last year with what was the world’s largest ever listeria outbreak. The company is facing a class action lawsuit over its role in the incident. The outbreak killed over 200 people across the country and was traced to a factory run by Tiger Brands, owned Enterprise Foods. The country’s leading food producer said its value added meat products division had been earmarked for review prior to that event, and that the review had concluded it was “not an ideal fit” within the portfolio. Tiger Brands said in a stock market statement that the board had started formal due diligence on 6 November after receiving several indicative offers. It will further evaluate its options once this is completed. The unit’s revenues slid 79% in the six months to end March, prompting an operating loss of ZAR 296 million as it struggled to get back up and running following the suspension of its operations. It reopened in December 2018.
  • Adisseo has announced a strategic cooperation with Chinese dairy giant Mengniu Group. The partnership will have three facets: research and development cooperation focused on supporting reproductive cows through interventions (including amino acid balancing); technology and experience exchange, focused on sharing knowledge about best practices to improve production, health, and reproduction; and using Mengniu’s “Love to Raise Cows” e-commerce purchasing platform to cooperate on market promotion among dairy farmers who supply milk to Mengniu.
  • Tyson Foods and other US meat giants are poised to benefit as China struggles to replenish its disease-decimated pork supply, but for now, Tyson’s problems closer to home are expected to show up in the Arkansas company’s fiscal fourth-quarter results. A fire in August shut down one of Tyson’s biggest beef plants, cutting into some sales and forcing the company to truck cattle to other plants, while operational problems in some of Tyson’s chicken plants have continued, Stephens analysts write in a research note. Analysts surveyed by Factset expect Tyson to report profits of USD 1,30 per share, down 18% from last year’s same period, while sales overall are projected 10% higher. Tyson shares slipped 0,3%.
  • Ivan Vindheim (48) has been appointed the new chief executive officer of Mowi ASA. Vindheim succeeds Alf-Helge Aarskog (52) who has decided to step down after almost 10 years. The appointment was effective as of 12 November 2019.
  • On 12 November Evonik announced that an issue with the supply of hydrocyanic acid (HCN) has caused a temporary shutdown of its two methionine manufacturing plants in Antwerp and declared force majeure on all existing contracts. However, normal production has resumed on 26 November, and Evonik declared that the crisis was over.
  • Nor-Feed, a French producer of natural additives and botanicals, has obtained a building permit for a new manufacturing plant in Chemillé, near Angers. The plant is expected to be completed by the end of the fourth quarter of 2020 and will enable Nor-Feed to quadruple its production capacity of concentrated extracts. The new plant will manufacture all Nor-Feed’s existing products as well as specific and customised plant-based mixes.
  • Tyson Foods expects its Holcomb, Kansas beef-processing plant to reopen sometime within the next 60 days. The plant is one of the biggest in the beef industry, representing about 5% of daily US cattle-slaughtering capacity, and its shutdown in August after a fire sent cattle prices sharply lower for ranchers and feedlot operators, with one major slaughterhouse offline. For meatpackers like Tyson, processing profit margins went up, as the supply of processed beef became constrained.
  • Grain trader Archer Daniels Midland (ADM) does not expect to continue its aggressive strategy of acquisitions in the next few years and will instead focus on organic growth.
  • Publicly quoted Australian animal nutrition company Ridley Corporation announced an internal restructure plan including significant reductions in staffing levels and further mill rationalisation. A press release about the move makes clear that construction of its new feed mill at Wellsford, Bendingo, in Central Victoria continues and remains on-target for completion in the last quarter of this financial year. However, the rationalisation which will follow the new mill’s completion, including asset impairments and write-downs, is expected to incur costs of AUD 6 million.
  • Hilton Foods’ Australian arm recently opened an AUD 280 million meat processing and distribution facility in Brisbane. According to a press release by the Queensland government, the new Heathwood plant features 23 production lines and will supply packaged meat and vegan products to local retailer Woolworths. The facility has created more than 650 jobs, with more expected when it reaches full production capacity next year.
  • Nestlé Purina PetCare’s new USD 320 million pet food manufacturing facility in Hartwell, Georgia marks the company’s 21st in the United States. According to parent company Nestlé, the new plant is its “single largest investment in a pet care facility in the last decade in the United States, Canada and Latin America”. The Hartwell facility currently has nearly 200 employees. That number is expected to grow to 240 as new lines and other expansions at the site are actioned in the next few years.
  • ADM has announced the launch of a new feed plant in Hoa Mac, in the northern Ha Nam province of Vietnam, amid a key farming region and near to port facilities. Occupying 4,6 hectares of land, the Hoa Mac facility will mainly focus on feed for swine, poultry, and rabbits. It boasts modern pneumatic transfer of raw materials to avoid cross-contamination, as well as automation of functions including micro-dosing, bagging and palletisation for superior accuracy and traceability. The site is powered by what ADM describes as a renewable energy biomass boiler.
  • Marfrig Global Foods has signed an agreement with Jeffries Financial Group Inc. to acquire the financial group’s remaining 31% interest in National Beef for USD 860 million. According to a press release, Jefferies will earn an additional USD 110 million from final distributions from National Beef. The deal raises Marfrig’s current stake in the US meatpacker to 81,7% after it acquired a 48% interest in the company from Jefferies in June 2018.
  • The future at Vion Food Group’s pork and beef processing plant in Altenburg, Germany will focus on cattle. The Thüringen site will stop the slaughter of pigs in the first quarter on 2020, with a future focus on expanding in the beef market. In recent years, pig production in East Germany and in the area served by Vion’s Altenburg site has been in continual decline. But the region shows great potential for growth in the area of beef due to the high density of cattle in East Germany. Vion has decided to expand and specialise its Altenburg site for this sector.
  • Cal-Maine Foods, Inc. has announced that it has closed the previously announced acquisition of certain assets of Mahard Egg Farm Inc., relating to its commercial shell egg production, processing, distribution and sale of shell eggs business. The acquired assets include commercial shell egg production and processing facilities with current capacity for approximately 3,9 million laying hens and permitted capacity for up to 8 million laying hens, a feed mill, pullets and related production facilities located in Chillicothe, Texas, and Nebo, Oklahoma, and a distribution warehouse located in Gordonville, Texas.
  • French pig processor Cooperl Arc Atlantique is reportedly considering investing in a project by Russian counterpart Coral LLC to set up a pig breeding and processing complex in the country’s Tver region. The companies met last week with regional governor Igor Rudenya to discuss investment in the project, which entails the construction of six pig breeding facilities, a feed mill, and a breeding and genetic centre. Coral estimates that the project will be completed between 2022 and 2023, and cost around USD 470,4 million. It has already invested USD 282,2 million.
  • US poultry producer Wayne Farms has reportedly completed an expansion to its Enterprise plant in Alabama, adding around 200 000 square feet (18 500 m2) of space to the facility. Refurbishments will help increase production at the facility and allow the company to further expand into the antibiotic-free poultry market. Wayne Farms announced the expansion in 2017 and, at the time, explained that the expanded plant will focus on its Naked Truth premium chicken brand “in order to meet the needs of a growing number of conscientious consumers who want proof of responsible care behind the chicken on their plates”. The new expanded plant has around 350 employees with the company looking to expand the workforce to 500 once fully operational.
  • East Hope Group, a Chinese conglomerate with many agricultural activities, has announced it will be investing USD 284 million in expanding swine production in Yanling, in Hunan province. It is understood that the project includes investments in all parts of the value chain, including feed production, breeding, pig farming, slaughtering, food processing, cold chain logistics, and even the utilisation of biogas. The company estimates it will produce 40 000 breeding pigs and 1 million fattening pigs per year.
  • Cargill Inc., the Canadian arm of the US agribusiness giant, has taken steps to ensure its customer needs are met during a strike at Canada’s biggest railway, Canadian National Railway Co. The strike by some 3 200 unionised employees entered its seventh day, leaving more than 30 vessels waiting on Canada’s west coast.

Research and technology

  • Dr Liz Koutsos, the chief executive officer of Enviroflight, who opened what it says is the first commercial-scale insect rearing facility in the United States about a year ago, took to the stage at Feed Additives Americas 2019 in Miami and made an interesting analogy between the current state of the insect protein industry and what chicken farming was like 100 years ago – a time when chicken rearing was mostly a backyard operation and not the large-scale industry it is now. Indeed, with a 50-day life cycle from birth to breeding, which is a very short life cycle, the insect protein model is poised to evolve much more rapidly than with longer-lived animals. Insect farms benefit from rapid reproduction cycles and larvae can be harvested at very early stages. Furthermore, crickets, black soldier fly larvae and mealworm larvae are equivalent to fishmeal in terms of their crude protein and crude fat content. Also, most insects are nutritionally complete when looking at their vitamin’s profiles. Insects can also be grown on a vertical/three-dimensional farming basis. Three-dimensional farming massively improves yields in a small area, referring to reasons as to why the industry is attracting large sums of investments.
  • Fly farmer and insect technology pioneer AgriProtein, in collaboration with the South African National Bioinformatics Institute at the University of the Western Cape, have sequenced the genome of the black soldier fly (Hermetia illucens) across both sexes and strains originating from Kenya and South Africa. In addition to the whole genome sequence, microRNA sequencing has been carried out on four life stages of the fly, namely the egg, larvae, pupae and unmated male and female fly, in order to create a map of expression across the life of the fly. As part of the Insect Technology Group, AgriProtein has over 50 skilled and experienced scientists working as part of a global research and development team to expand the understanding of the insects that they work with. The AgriProtein team has embarked on unravelling the blueprint of the black soldier fly and continues to push the boundaries of scientific exploration, knowledge and understanding of this remarkable insect to drive factory operating metrics.

Charts

A sluggish lysine market continued into early November, but a reported increase in the Chinese pig herd, albeit very small, have sparked some life into the market. In preparation for the upcoming New Year celebrations, feed millers are stocking up and this have led to modest price increases in late November. Overcapacity will however limit the upward scope. In the European market price offers have also seen increases in the past weeks, pushed by producers to return to profitability.

Chinese methionine prices have built some momentum in November, and this should continue into December and January. The upcoming holidays, a robust poultry market and reports of limited imports have all contributed to price increases. European prices have stabilised at a higher level after Evonik’s production halt in November.

With lower production levels, and improved export demand, Chinese threonine prices stabilised. Further upward scope in limited though. The European market is well covered, and little price movement was seen.

In contrast to other amino acids, increasing demand are pushing valine prices higher in both the Chinese and European markets. Supplies are adequate, but expect higher levels going forward.

Tryptophan prices have firmed on the back of improved sentiment, driven by the upcoming holidays, and a slight recovery in the Chinese pig herd. Upward scope is however limited. European prices are flat and should remain stable for the foreseeable future.

For more information

contact Heinrich Jansen van Vuuren
heinrich@chemunique.co.za

This report contains information supplied by and compiled from eFeedLink and Feedinfo.
Detailed reports and references are available on request.

Synthetic amino acids

L-Tryptophan

Synthetic amino acids

L-Threonine

Synthetic amino acids

L-Arginine

Synthetic amino acids

L-Valine

Synthetic amino acids

L-Isoleucine

Synthetic amino acids

L-Lysine

Synthetic amino acids

L-Methionine