California poultry company files for Chapter 11 bankruptcy

California-based poultry company Zacky Farms LLC filed for Chapter 11 bankruptcy October 8 with the United States Bankruptcy Court, but said normal operations and customer service will continue without disruption.
Due to historically high corn and soybean meal prices, Zacky incurred significant operating losses that depleted its liquidity and working capital position.
Zacky has not set a target date for emergence from Chapter 11, but the company has employed financial advisers to explore strategic alternatives. 

Brazil poultry industry calls for government assistance

Brazil's poultry industry is facing some of its strongest challenges ever due to inflated feed prices and lack of credit, and the Brazilian Poultry Union, UBABEF, is calling on the government and the public for help.
According to UBABEF, the price of soya on the home market has risen 80 percent over the last six months, while that of corn has increased by 40 percent. These two inputs alone account for 60 percent of its members’ production costs, and these numbers, combined with a lack of credit, have led to some producers taking the only option available to them — stopping production.
Poultry producers are now having to pay on delivery for feed grains, or even prior to delivery, when previously they enjoyed a 40-day payment period. Banks, both public and private, have been tightening credit and creating barriers to business for the sector. UBABEF said that 3.5 million jobs are at risk in the current climate, as are the positions of 16,000 families who form part of integrated operations. Francisco Turra, UBABEF president, has publicly called on the government and state-owned and private banks to intervene immediately to restore access to credit.

Supermarket price increases
Research carried out by the Sao Paulo poultry association has found that some supermarkets are taking advantage of the current high feed prices and increasing the prices they charge consumers without passing on any of this increase to producers. According to the study, in some cases, a tray of breast fillets is being sold at 120 percent more than that paid to producers, while whole chickens can be up to 139 percent more expensive. Turra has described the behavior as “unethical.” 

British Pig Executive creates online feed crisis center

The British Pig Executive has created an online feed crisis center in response to the increase in grain prices, which are having a dramatic impact on the cost of production for pig farmers, according to the organization.
The site includes links that will help producers find ways to minimize the effects of high prices, as well as "do's" and "don'ts" for maintaining a profitable business. Among the tips are:

• Don't be tempted to scrimp on feed quantity or quality.
• Don't cut back on vaccination programs to save cost.
• Do keep the culling rate up to maintain an efficient herd.
• Do speak to your nutritionist to ensure optimal diet specifications and feeding strategies.
Further information is also provided for those producers in need. 

Eastern Shore poultry industry will have challenging 2011, say officials

In a meeting with state lawmakers from the Eastern Shore (Delaware, Maryland, Virginia), poultry industry officials expressed concerns that the business is in for a challenging 2011 due to factors like high grain prices, stricter state regulations and the impact of a down economy.  
"This is going to be a tough year in the chicken industry, a real tough year of belt-tightening, because of a number of factors," said Bill Satterfield, the executive director of Delmarva Poultry Industries Inc. He said the poultry industry is dealing with record-high grain prices, high fuel prices, a dwindling export market and declining restaurant sales due to the struggling economy.
An additional concern involves area stormwater management regulations, which Kenny Bounds, chairman of DPI's government relations committee, said are having a negative impact on the poultry industry. Due to these regulations, the site work for a new poultry house now costs 300% more, making construction financially prohibitive. A report on the issue has been prepared for the Maryland Department of the Environment.
In spite of the challenges, some large poultry companies, including Allen Family Foods, Perdue and Mountaire Farms, have been investing in new buildings and expanded operations on the Eastern Shore. Production, however, has remained flat, according to Satterfield.

Hungary Poultry Products Council calls for state purchases of maize

Hungary's Poultry Products Council is calling for state intervention purchases of 500,000 metric tons of maize to prevent fears of domestic shortages stemming from increased feed exports.
A wheat shortage in Europe is driving up maize prices, which have reached HUF 58,000 to HUF 60,000 per metric ton, triggering an increase in maize exports. The rise in feed prices may also push up farm gate poultry prices by 20 to 25pc beginning in March, according to council head Laszlo Barany.
In response, Hungary's Rural Development Ministry said the country's maize harvest is more than 3 metric tons over domestic demand, and the supply of grain-based feed in the rest of Europe is currently at sufficient levels.

Feed union calls for European action on escalating grain costs

European feed manufacturers’ federation FEFAC has called on the Farm Council of the European Union to suspend import duties on all cereals in order to ease the “extremely worrying” market situation of the EU livestock sector caused by escalating feed grain costs.
The last time the EU suspended cereal import duties was in 2007, according to the federation, and prices for feed grains have recently returned to the exceptionally high levels of 2007/2008. “The EU pig sector in particular is facing a near market collapse,” said FEFAC president Patrick Vanden Avenne. “A key reason is the rising cost of feed grains resulting from global demand outpacing supplies. The current market crisis has been further exacerbated by the knock-on effects of the dioxin incident in Germany, leading to a drastic fall in domestic consumption and the temporary closure of some important export markets for German pigmeat.
Market experts, according to Avenne, anticipate that the present tension on the EU and global cereals markets may grow further before the end of the marketing year due to rising global competition for scarce feed grain supplies.

China commodity prices up across the board

China's major meat and feed commodity prices were up across the board for August from a month earlier, according to the Ministry of Agriculture.
Pork prices have been rising for two straight months, up 10% in August from July at 19.30 yuan per kilogram. Egg prices came in at an 8.4% increase from a month earlier to 8.66 yuan per kilogram, while dressed chicken rose 4% to 14.73 yuan. Beef and mutton showed small growth, 0.8%, to 33.55 and 34.61 yuan per kilogram, respectively.
Average corn prices in August rose 0.5% from the previous month and 17.9% year-on-year to 2.11 yuan per kilogram, while soybean meal prices grew 3.9% to 3.45 yuan per kilogram.

Outlook for feed prices up

Feed grain prices are expected to rise in 2010-11, according to a new report from the U.S. Department of Agriculture Economic Research Service. The July 13 Feed Outlook report forecasts an increase in prices for corn, sorghum, barley and oats this month, with ending stocks projected lower. Feed grain production and planted harvest area to be up from 2009 for corn, offsetting reductions for sorghum, barley, and oats.
The report also reported an increase in pork and broiler production in 2011. Data shows a 2% increase for pork as hog farmers continue to see gains in pigs per litter. Hatchery figures also hatchery data shows growth in bird numbers and increasing weights, with broiler production expected to be up 3% in 2011 from 2010 projections.

USDA: Turkish biotech rules restrict poultry sector growth

A Turkish ban on genetically modified crops has caused feed prices to spike and is limiting poultry industry growth, according to a U.S. Department of Agriculture report cited on Agrimoney.com.
Turkey banned the import of genetically modified food and feed crops in October. By November, soybean prices rose 40% to $700 per tonne, according to the USDA report. Prices for corn gluten feed and distiller’s grains also increased.
Russia wants to increase its poultry imports from Turkey to fill a gap created when Moscow banned poultry shipments from the United States. But Turkish producers say they will be able to export only about 100,000 tonnes of poultry this year, falling far short of Russia’s 500,000-tonne order. Turkey exported a total of 115,000 tonnes in 2009, according to Agrimoney.com.
The USDA report said that Turkey will be unable to expand at the rate needed to meet Russia’s import demands as long as biotech crops are restricted. Turkey is expected to enact additional legislation in 2010 that would ban domestic production of genetically modified crops.

Philippines corn prices expected to fall

The price of domestic corn in the Philippines is expected to continue its downward slide in the face of increasing imports and lowered use of corn in animal feed, according to The Philippine Star. It is currently about 10.50 pesos to 11.50 pesos per kilogram.
Imports are rising with the country's participation in free trade agreements with members of the Association of South East Asian Nations and China, the newspaper reported.
In the face of a corn shortage in the first half of 2009, feed mills increased the percentage of substitute ingredients, such as feed wheat, in their mixes. But Roger Navarro of the Philippine Maize Federation wondered why they are not reintroducing more corn into their mixes, since the harvest rebounded in the latter half of 2009 and is expected to be good in 2010.

Managing risk during stormy times

How feed companies are managing risk during boom and bust. Read the full article.

Wet weather affects corn harvest

If you live in the U.S. Midwest, as I do, there is one fact that is perfectly clear - you are in farm country. Specifically, this is corn and soybean country.
Every year, come October and November its harvest time. This year it is also perfectly clear that the lousy weather we're having - as in large quantities of rain - is holding back the harvest.This should not be news to anyone, as it has been widely reported on.
Even today there was an article in the Wall Street Journal about it. The bad weather has delayed the harvest and made corn prices spike 10% this month. The real question is whether or not (no pun intended) the corn will come in OK in the end and prices will drop.
Nobody seems to be quite sure and there is much speculation, so right now you can get someone to agree with just about any theory out there. The fact is that the rate of corn harvest is far behind what it usually is at this time of the year. Read the full blog.

GMO hullabaloo

Given the fact that world demand for food is going to skyrocket, some see it doubling, in the years ahead, it seems that the only word to describe the controversy over genetically-modified organisms is this one: nonsense. The biggest battle over GMOs right now is in the European Union (EU). And it's because of this: last summer, minute traces of unapproved GMO corn unapproved in the EU but approved in the U.S. was found in a shipment of soybeans from the U.S. to Europe. The result has been literally to freeze soybean exports to the EU, which has created nothing short of a crisis for the European feed and livestock industries.
At the moment there is only about a 30-day supply of much needed soy in Spain and several other countries. Because the U.S. cannot guarantee that soy shipments are free of traces of GMO corn, no U.S. soy is being exported to the EU. And with one of the lowest harvests of South American soybeans years due to a serious drought, there are no soybeans of South American beans available for export to anyone. Adding more pressure to the mix for the EU is the fact that China is buying large quantities of soybeans this year.
As a result, it's said that the premium on soybean meal in Europe at the moment is as much as $90/ton.The EU's stance of dragging its heels is putting its feed and livestock industries at a comparative disadvantage, but the larger issue is how its position is justified in a world that is going to need increasing amounts of food, especially animal protein, in the years ahead.
Read the full blog.

Rain delays cause rise in feed prices

Corn and soybeans prices are rising as the harvest waits in wet fields, according to reports. The Chicago Board of Trade was selling corn for approximately $3.70 a bushel and soybeans at $9.73.
The U.S. Department of Agriculture released an update stating only 14% of corn and 13% of soybeans have been harvested.

Afta plan removes feed material tariffs

According to reports, the free-trade plan of the Association of Southeast Asian Nations (Asean) will lower feed costs for poultry and hog farmers. The plan is awaiting implementation.The Asean Free Trade Area-Common Effective Preferential Treatment (Afta-Cept) will eliminate tariffs, making alternative feed materials such as tapioca more affordable. The current tapioca tariff is 35%.
Other tariffs to be lifted include those on soybean meal and DDGS at 3%, and soybeans at 1%. Under the new plan, a 35% tariff on yellow corn imposed by Manila, Philippines, will also cease, potentially opening up new markets.

Indian poultry industry enjoys improved margins

According to reports, India is experiencing a rise in poultry demand as the festival season continues and the country enjoys a mild start to winter. This comes as feed prices are stable, and thus improving margins for poultry traders.Prices for live weight broilers have increased to Rs70 a kg from Rs60 a month ago. Egg prices have also increased 15%.
Poultry traders speculate that increased feed costs are coming due to low bean output.

Price volatility management strategies

Managing a feed company during extraordinary prices swings like those seen in 2008 and early 2009 is no easy task.
John Scheuers, vice president of feed operations for United Cooperative, based in Beaver Dam, Wis., says the overall key ingredient to successful management when prices yo-yo on a daily basis is to pay attention to detail.
“There were times when we changed prices daily on our feeds instead of weekly,” Scheuers says. “We went to a daily price concept as we made our way through the volatility.”
He and his cooperative, which serves mostly dairy producers in south-central Wisconsin, also paid closer attention to risk management.
“We took smaller positions more often rather than larger positions less often,” he says. That gave United Cooperative more flexibility and helped it cost-average in and out of the various grain and oilseed markets.
“In such volatility you are either on the right side or the wrong side of the market,” Scheuers notes. “Taking smaller bites helps spread out risk.”
On the feed side of the business, United Cooperative buys basis and manages for basis versus doing a lot of hedging or position taking, while the grain side of the cooperative takes more positions in the futures markets.

Dairy industry struggling
With the dairy industry in one of its deepest and longest slumps in years, volatility has also hit the co-op through sales.
“People have cut back on volume and on the level of nutrition being fed. They are in survival mode versus thriving mode,” Scheuers notes. “That affects income, so we’ve become more cost sensitive in the operations of the company.”
Overall, both producers and those in the feed industry have become more conservative since the 2008 commodity bubble popped.
Buyers want shorter contracts, and in general livestock producers are living more hand-to-mouth with their feed needs.

SmartStax corn qualifies for insurance break

According to reports, corn hybrids containing SmartStax, a technology developed by Monsanto and Dow AgroSciences, will qualify for the Pilot Biotechnology Endorsement (BE) in 2010.
This program allows farmers to receive a break on their crop insurance premium rate. The Pilot BE program brings down the costs of crop insurance for those who meet the program requirements and plant certain qualifying hybrids in Colorado, Illinois, Indiana, Iowa, Kansas, Michigan, Minnesota, Missouri, Nebraska, Ohio, South Dakota and Wisconsin.

NCC opposes 15% ethanol blends

The Environmental Protection Agency should resist the ethanol industry's demand that it legalize blending of ethanol into motor gasoline up to 15%, according to the National Chicken Council. NCC warned that the higher blend could cause damage to cars and trucks built to run on a maximum of 10% ethanol and would create additional volatility in the grain market.
Growth Energy, a group led by Poet Energy, the nation's largest ethanol distiller, petitioned EPA to raise the legal limit from 10% to as much as 15%, asserting that the higher blend would make no difference to operation of the millions of cars and trucks in the U.S. that run on conventional fuel.
EPA said its consideration of the Growth Energy petition would be based on whether there is adequate reason to believe that more ethanol in fuel would not cause harm to engine components, particularly pollution control equipment. NCC argued that pending studies must be completed before a final decision can be made.
Growth Energy and other ethanol backers claim that the 10% limit effectively caps the amount of ethanol they can sell, calling it the "blend wall."
Comments to EPA on the Growth Energy petition are due no later than July 20 and can be made through the government's official portal at www.regulations.gov.

Evonik announces L-Threonine price increase

The Health & Nutrition Business Unit of Evonik Industries AG, Essen, Germany, is raising its prices for L-Threonine feed grade €0.17/kg in Europe and US$0.26/kg in other world areas, due to increased costs of key raw materials, logistics, gas and energy.
This price revision, according to the company’s release was immediate as of March 13. The company adds that all prior agreements will be honored.Evonik Industries produces and marketst all four amino acids for animal nutrition: DL-Methionine, Biolys (L-Lysine), L-Threonine and L-Tryptophan. The company delivers its services and amino acids in over 100 countries