by Amanda Smith, Associate Editor
Much of the action in dairy feed prices has centered on soybean meal and its record-setting pace of exports the past three months. USDA crunched numbers on soybean crush, domestic use and export commitments, and it has maintained a 135 million bushel soybean carryover for the latest crop year. This is considered by most market watchers to be the bare minimum needed to maintain adequate supplies throughout the rest of the crop year.
This situation is already impacting other feed and by-product markets, particularly those that tend to move in sympathy with benchmark soybean meal prices. John Kappelman, a former dairy farmer and now a trader with Cereal Byproducts Company, explained why some by-products prices have skyrocketed in recent months.
Corn gluten feed: The corn gluten feed market remains tight and prices are being driven by protein value. Some large Western dairies, facing severe drought, have committed to significant purchases of Midwest gluten feed pellets. The worldwide sugar glut is also suppressing demand for corn sweeteners, limiting the crush at corn wet milling plants.
Canola: Railroad movement of canola meal from Canada has improved in recent weeks. However, problems still exist as rail lines attempt to alleviate supply backlogs. One fear is that when rail movement resumes, end user receiving points will be overwhelmed with shipments and struggle to handle them.
Cotton: A short on acreage but good yielding cotton crop was 27 percent smaller than last year. Cottonseed prices have been driven well above the $400 per ton mark. Adding to the price fury, a significant export sale was made to Japan recently with delivery spread through the spring and summer.
Distillers: Even with the recent news of some distillers being rejected due to GMO issues, exports maintained a rapid pace, driven by protein demand. Some upper Midwest plants are not contracting domestic dry distillers grains forward and have only limited spot loading available.
For more of Kappelman's insight on the protein markets and what prices may look like in the short term, read page 381 of your May 25, 2014, issue.
