Amino report – October 2021
Feed additive prices: The worst is yet to come
The Chinese electricity crisis has wreaked havoc on amino acid and vitamin production. Prices that were already trending higher, thanks to international shipping issues, are now set to push even higher as stocks dwindle amid throttled output.
In other news
British pork farmers and abattoirs have been fighting an uphill battle against the British government to ease immigration restrictions on European Union (EU) nationals in the wake of Brexit. Pork abattoirs and processors are facing a shortage of butchers and slaughterers, causing severe bottlenecks on farms where nearly 150 000 market-ready animals were stuck by mid-October already and facing mass culling. Most abattoir workers originate from eastern Europe, and when Britain’s severe COVID-19-related restrictions were lifted, most elected to return home. True to form, government officials have been slow to react, with Prime Minister Boris Johnson quipping those industries should wean themselves off cheap imported labour. However, the desperate calls from farmers and industry leaders finally got the message through and the British government will allow some EU nationals to return on short-term seasonal visas. Britain has seen logistical disruptions, fuel shortages, and skyrocketing energy prices in recent months exacerbated by a shortage of truck drivers, also primarily of eastern European origin.
Continued container shortage
Much has been written about the logistical issues plaguing global trade. One of the underlying reasons is the chronic shortage of containers that seems to be getting worse, not better. One the worst affected areas is the east coast of the United States (US), where dozens of ships are waiting outside ports to deliver their cargo to the largest consumer market in the world. The US approach to softening the economic fallout from COVID-19 in the form of stimulus cheques has caused a surge in demand for all types of consumer goods, causing more cargo ships to arrive from Asia than ever before. This is overwhelming port capacity to unload and process goods. There is even a shortage of trucks to haul containers from the docks to warehouses, not to mention a shortage of drivers for available trucks. Rail terminals are said to be congested, while the backlog continues to grow. The Port of Los Angeles has announced that it will start operating on a 24-hour basis after President Joe Biden intervened; however, critics say that the entire logistics chain must operate on a 24-hour basis, otherwise the bottleneck will just shift to the docks. The return of empty containers, so needed by the global supply chain, is putting even more pressure on the east coast ports. In the last few weeks, the Port of Los Angeles alone has handled more than 2 000 empty containers.
Chinese MCP ban
Chinese government officials announced a ban on all phosphate and phosphoric acid exports early in October, adding to the woes of the global feed industry. Phosphoric acid is critical to produce feed phosphate products, such as monocalcium phosphate (MCP) and dicalcium phosphate (DCP). The aim of the ban is to ensure sufficient domestic supply after production was cut to meet government-driven energy and emissions targets. Almost all sectors of the Chinese economy have been affected by severe cuts in production, with total shutdowns in some cases. Prices around the world have shot up and it seems that, as with certain amino acids, availability has trumped price. Many European and North American buyers have reported price increases and a general inability to get obtain stock. In the South African market, shortages have already been reported, while there is no immediate alternative to Chinese imports.