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May Animal Feed Market Activity

Posted on May 15, 2017 in U.S. and International Animal Fats & Protein

Market Activity

Ruminant MBM trading was reported $205 – 250 out of the Mo. River market today, $260 topside out of IL. Sources continue to report the same dynamics, strong headwinds into the blend sector, but pet food is paying values at the top end of the range. Those with export licenses are moving material at much higher prices.

Blood meal trading was quiet today, but sources suggested the trading range may be headed lower next week. Cattle kills were estimated at 609,000 head for the week, down 3,000 from last week, but up 11,000 head compared to the same week last year.

Please contact Ryan Standard at 563.223.9021 or ryan@thejacobsen.com with any questions, comments or trading.

Broiler-fryer slaughter under federal inspection for 12-May-17 and 13-May-17 is estimated to be 34,356,000 head down 3.92 percent from a week ago and up 1.5 percent from a year ago. (Last week 35,759,000, last year 33,832,000)

Weekly broiler-fryer slaughter under federal inspection for the week ending 13-May-17 is estimated to be 166,646,000 head up 2.95 percent from a week ago, and up 2.57 percent from a year ago. (Last week 161,870,000, last year 162,473,000)

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The International Market

Posted on May 15, 2017 in Hide & Leather

The International Market

Argentina

In April, 950,000 head were dispatched to slaughter. This was 14% less than in March and 5% more in the year-on-year comparison. Considering the business days of each month, the daily average was the same as in March, with a remarkable growth of 16% compared to a year ago.

After two weeks drop, rawhide prices stopped its descending trend. Buenos Aires wet salted heavy steer hides are trading unchanged from last week, at about US$0.65-$0.73 per kg depending on hide quality.

Demand remains calm.

Paraguay

Just like recent weeks, the market is extremely quiet.

Sales of wet blue hides continue being made without price changes. Full substance whole hide wet blue TR1 continues trading at about US$1.25-$1.30 per sq. ft.; and divided hides (grain splits) TR1 1.8mm/up at about US$1.10 per sq. ft.

Of late, exports of semi-finished and finished leathers has grown significantly.

Slaughter continues strong. A beef export record is expected this month.

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Yellow Grease Grinds Higher as Momentum Continues to Surge

Posted on May 15, 2017 in Animal Fats & Oils

Yellow Grease Grinds Higher as Momentum Continues to Surge

Yellow grease prices remained stable and continue to grind higher having increased by more than 11% in 2017.  Prices are bumping up against resistance near the Bollinger band high which is 2-standard deviations above the 20-week moving average at 25.  Support is seen near the 20-week moving average at 23.75.  Prices have benefited from strong demand for vegetable oil which has kept prices of animal fats buoyed.  The slow increase in the Bollinger band width reflects rising historical volatility.

The weekly relative strength index (RSI) continued to climb higher this past week which reflects accelerating positive momentum.  The RSI is a momentum oscillator that measures accelerating and decelerating momentum, along with overbought and oversold conditions.  The current reading on the weekly RSI is 77, which is well above the overbought trigger level of 70, which could foreshadow a correction in prices.  Despite this relatively high level, the RSI climbed as high as 91, when yellow grease prices surged in April of 2016, which means that momentum can continue to drive prices higher.

Momentum as reflected by the weekly MACD (moving average convergence divergence) index is positive. The MACD is also a momentum indicator that measures momentum by evaluating the difference between two exponential moving averages.  As this differential accelerates it can generate a crossover signal, which occurred in January of 2017. The index is printing in the black, and the MACD histogram has a positive trajectory which points to higher prices for yellow grease.

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DCO output ramped higher as Ethanol production re-engaged

Posted on May 15, 2017 in Biodiesel, Vegetable Oil, and Grain

Distillers Corn Oil Production – DCO output ramped higher as Ethanol production re-engaged during week ending 05/05/17

Per the EIA’s Weekly Petroleum Status Report, average weekly ethanol production snapped higher, pushing back above a million gallons per day after a four-week slowdown. During the week ending May 5th, production averaged 1.006 million barrels per day, up 20,000 barrels from the week prior. Gasoline demand pushed 2.75% higher, rising 252,000 barrels per day to 9.41 million. Ethanol stocks narrowed, falling by 158,000 barrels to 23.055 million. Ethanol imports resurfaced on the West Coast for the first time in the past 37 weeks, averaging 28 thousand barrels per day. The increased ethanol production raised corn demand by up to 296,000 bushels per day. DDGS output rose in sync with ethanol production, rising 2% week over week.

Year to date, ethanol production has averaged 1,028,889 b/d, down 1,900 barrels per day from last week but remains above last year’s average of 971,000 b/d. At its current pace, the industry is on track to produce 15.77 billion gallons, well beyond the 2017 finalized ethanol RVO of 15 billion gallons. Whether the industry can blend enough to meet the mandate remains the question.  Average ethanol production for the latest week is 44,000 barrels a day more than it was a year ago (1,006 bpd vs. 962 bpd). Domestic gasoline demand decreased 2.75%/252k bbls per day. Ethanol inventories narrowed 0.68% to 23.055 million barrels. Ethanol production as a percent of gasoline demand narrowed to 10.69%. 2017 gasoline demand is, on average, 13.78 million gallons less per day than it was over the same period in 2016.

As a co-product of ethanol production, the daily amount of distillers’ corn oil produced is approximately 8.33 million pounds per day, up 165,594 pounds daily from a week ago. The table and chart below show the recent amounts of corn oil produced daily over the past several months. Distillers’ corn oil has seen its demand rise from an average of 9 million pounds used in production per month in 2010, to 109 million pounds per month in 2016.

Due to state mandated low carbon fuel programs like California’s Low Carbon Fuel Standard (LCFS) and Oregon’s (CFS), feedstocks with lower carbon intensity (CI) ratings have been receiving more attention due to the higher credit value they generate. The credit will be larger, the larger the difference between the current baseline CI value and the feedstock CI value.

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Non-GMO / Organic December 28th, 2016

Posted on May 4, 2017 in Non-GMO vs GMO

Around the Markets Organic Corn Prices and Organic Soybean Prices

Organic Corn trading activity has slowed during holiday season.  Prices will likely remain stable until activity picks up in the new year. There are Q1 bids near $7.25 and offers at $8.0. The carry for Q2 has declined back to zero. NON-GMO yellow #2 CIF remained steady at $0.10 premium over conventional the balance of Q4, and Q1.

Corn board futures prices have rebounded this week after declining back to levels seen in the beginning of December. Hedge fund traders substantially added to short positions in futures and options. Per the most recent commitment of trader’s report released for the date December 20, 2016, managed money added nearly 20K contracts to short positions and reduced long position in futures and options by 3K.  That takes the number of short futures and options contracts that outnumber managed money that is long to approximately, 97K contracts up from 74K contracts, 1-week ago.

Mid-west organic soy bean trading activity is subdued.  Prices have dropped to the $16.50 levels driven by declines in bean meal prices. Import activity for bean meal, from China and India have pushed mid-west prices down to 775 range, driving down the price of organic beans. The carry for the second quarter is flat. NON-GMO soybean CIF for November and December delivery are trading $0.10 –  $0.30 above cash.

Soy bean oil prices tumbled back to earth as rain finally appeared in Argentina relieving tensions that yields would be scares. A stronger dollar is also generating headwinds for bean oil. Target support is seen near the 10-week moving average at 34.48 cents per pound.

In  the News

USDA Implements Import Certificate Requirement for Organic Products Shipped from Mexico

The USDA and SENASICA in October established an agreement to require import certificates for all organic products traded between the United States and Mexico. On Jan. 16, 2017, the new requirement will become effective for all products entering the United States from Mexico (USDA)

Organic Certification Streamlined

The USDA is streamlining the process for organic certification and helping producers out with the costs. The Farm Service Agency (FSA) announced starting March 20th, organic farmers can apply for federal reimbursement to help with the cost of maintaining and receiving the certificate to be organic. (ABC News)

National Organic Program Approves California Program

The California State Organic Program has been reviewed and approved by the U.S. Department of Agriculture Agricultural Marketing Service’s National Organic Program. (The Packer)

 

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