Feed additive market tracker: Amino acid and vitamin prices hold steady, Chinese feed production robust

The Caixin China Manufacturing Purchasing Managers Indices (PMI) indicated minor improvements, contrasting with the more pessimistic PMI from the Chinese government. The latter suggested ongoing struggles in areas like demand, the property sector, employment, and deflation.

Nevertheless, the exchange rates of EUR/CNY and USD/CNY remain stable, providing favorable conditions for foreign buyers.

Chinese feed production overview ​

China's feed production witnessed a robust growth of +6.8% in 2023, primarily fueled by increased demand in the pig and poultry sectors. Pet food also experienced significant growth, albeit from a low base, while aqua feed volumes declined, according to a review from Kemiex.

The swine sector in China though is currently facing challenges with low pork prices and demand, leading to escalating losses and diminished profitability. Slaughter volumes have increased since November 2023, with that development accompanied by a decline in the number of breeding sows, noted the market intelligence firm.

Looking to the micronutrients market in China and additive premix volumes saw a notable surge of +8.7% last year, while feed additive production exhibited growth, particularly in amino acid output. This expansion was influenced by government initiatives aimed at reducing soybean meal inclusion rates in feed formulations.

However, production volumes of vitamins and minerals in China experienced a decline in 2023, Stefan Schmidinger, chief economist, Kemiex, tells us.

A deeper dive: amino acid and vitamin prices​

Amino acid and vitamin prices are proving stable currently with methionine, tryptophan, vitamin E, B1, and vitamin K holding steady. However, L-valine and calcium pantothenate - vitamin B5 - face continued weakness, outlined the Swiss firm.

Noteworthy developments of late in the methionine market included global price increases by Evonik, Adisseo's exit from production in Commentry, expansion works in Quanzhou, and scheduled activities by Asian players in China and Singapore during 2Q 2024, amid reports of tight supplies in Brazil.

Wanhua Chemical's potential entry into the vitamin A market in Q4 2024, with plans for a 10-15,000 t/a capacity for vitamin A 500 equivalent, would add a new dimension, says the data provider.

Meanwhile, the EU faces constraints in the supply of vitamin B12, with only Euroapi authorized to market the additive in the bloc from July onwards, and uncertainty looms over when Hebei Huarong's product would secure EU market approval.

The carve-out of the animal nutrition unit from dsm-firmenich, announced mid-February​​, has raised speculation about its potential disposal in the near future, and whether it is likely to be private equity buyers or market participants that would secure such assets, commented Schmidinger.

Freight rates​

Despite continuous uncertainty, freight rates showed smaller downward trends in February.

Kemiex's recent analyses highlighted a substantial deterioration in transit activity in key chokepoints, namely the Suez, which is exposed to the Red Sea conflict, and the Panama Canal, with low water levels creating challenges for shipments.

Grains and oilseeds​

Assessing macro ingredient trends, and the analyst sees that with global supplies recovering, prices have been falling in the grains and oilseeds markets.

Speculators in Chicago corn established their most bearish bets ever, while buyers of amino acids contemplated the possibility of this trend spilling over into Chinese markets, potentially exerting further downward pressure on corn starch and soybean meal, impacting domestic demand and raw material costs for amino acids, according to Schmidinger.

In the EU, prices for feed wheat and corn dropped by about -32% over the past year, supporting the profitability of livestock operations, he noted.