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Harvest is over and the corn pile at FSE is covered. We at PALS can get in without the corn bees' wings being sucked into our vehicles, get new air filters and a car wash. In the last NEWSletter I mentioned that time had been flying by. This last month was no different and the holidays will be here before we know it.
Volatile markets:
- The lysine and threonine shortage hit hard and fast which was compounded by Ajinomoto then announcing they will be shutting down their dry lysine and dry threonine at the end of 2024. Ajinomoto's decision was influenced by their interest in the human grade side as well as low market pricing causing lysine and threonine production to lack profitability which is why they've been decreasing their output for a few years now. Although that closure heavily impacts the domestic market and our region, overall, Ajinomoto made up for less than 2% of the global market. Ajinomoto will still produce tryptophan. Import lysine and threonine markets were highly affected by Brazil's 100% tariff on the import of Chinese EV vehicles and parts. The Chinese took every empty container for 6-8 weeks, stuffed them with EV vehicles and parts for EV vehicles and sent them to Brazil to beat the tariff's effective dates. This caused container prices to be 3-4 times as expensive and less shipments were brought over. Import Lysine and threonine will remain high as there is little remaining supply and could get higher with additional purchases. Pricing will get better when more product is received in the United States. Some are saying January, but I believe it could be later than that and we may see a lot of product heading into Q2; however, the East Coast Strike not being completely finalized and tariff additions could affect this. Please see below regarding tariffs.
- The copper metal market continues to be unpredictable. Despite having gone up after the first round of federal rate cuts, it has not taken the increase most anticipated after the rate cut in November. It has come down recently into the $4.10 - $4.15's range. Forecasts still show this market going back up which would take the copper sulfate price up with it.
- Since their plant explosion in July and anticipating a recovery by Spring, BASF has indicated that may be too early. As anticipated, other manufacturers ramped up production and that product with better pricing should be available in the next couple of weeks.
Evonik's domestic methionine remains stable in price, and they are almost back to normal lead-times but will still need a bit more time to get their inventory/stock levels back to their desired carrying levels. Import methionine hasn't affected Evonik's pricing due to minimal import volumes but it will be a growing concern and could force Evonik to be more competitive. Again, tariffs are going to play a large role in the methionine pricing future.
Evonik's Biolys is a domestic product that is a percentage of L-Lysine (HCL). Due to the lysine shortage and Ajinomoto's exit of domestic dry lysine, we have already seen this product go up slightly in price. I presume this will continue as people switch over to using Biolys in their formulas and Evonik identifies the increased volume. This product is an option for those wanting to stay with a domestic dry lysine or having issues securing import lysine. Please call me to discuss this.
Considerations for all imports is going to be the addition of tariffs under new administration. Now, I'm not saying this to cause fear, but it is something to watch as that could drastically affect import availability and pricing. With limited domestic options for dry lysine and threonine, I hope that our American feed officials mention and caution our administration on the full effect high tariffs could have to our food supply in hopes to keep all feedstock available and affordable.
At PALS we've got a lot to be thankful for. I want to take a moment to acknowledge YOU and express our gratitude for continuing your business with us. During your Thanksgiving preparations for the big day, spice up your life, and indulge in all the dinner must-haves. As we gather, slow down to take it all in, count your blessings and give thanks for family, friends, God and TURKEY! (Of course I had to throw that in there.) Gobble up gratitude and remember that time spent together is worth every second. After that, run like a mad man to snag all the good Black Friday deals!
Have a SAFE and Happy Thanksgiving!
Chelsey
Chelsey
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