Wednesday, 1 April 2020
As the UK remains in a net import position for protein crops, imports of soyabeans and more importantly, soyameal, have become vital in the livestock industry supply chain.
Throughout the season, demand for soyameal and compound feed fluctuates, peaking in September, December and March as livestock feed demand increased.
While there are fluctuations in the volume of soyameal used in compound animal feed, imports of soyameal tend to peak during the run up to December. Whilst average monthly imports tend to sit between 150 – 200Kt a month, this has peaked at nearly 300Kt and as low as 91Kt over the last 5 seasons. As the globally largest and second largest exporter of soyameal, Argentina and Brazil are vital not only for global supply of soyameal but for our domestic imports, with Argentina often accounting for the majority of the UK’s soyameal imports.
Due to the importance of imported soyameal for domestic livestock supply chains, a lot of attention is being given to possible disruption and delays to loading in Argentina the coronavirus pandemic spreads. While there have been reports of internal logistical complications in Argentina, and increased inspections of vessels, imports of soyameal in the UK have so far not been impeded. Although the Argentinian government has sought to maintain crushing and exports, this situation may well change.
As the global supply chain reacts to the spread of coronavirus, the value of soyameal has increased substantially, driven in part by the concerns over global availability and South American logistics, but also by demand as the supply of ethanol production by-products (DDGS) reduce.
Quoted at $318.70/t on 9 March, the value of FOB Brazilian 48% soyameal peaked at $367.70/t on the 23 March, gaining $49.00/t, and have remained supported. From a domestic perspective, the large volatility and devaluing of the pound through March has led soymeal prices to rise. Taking the same Brazilian FOB price series in pound sterling terms, from 9 March at £242.71/t by 23 March the FOB meal prices peaked at £318.41/t, a gain of over £75.70/t. Additionally, on an imported price level, from the 13 March, at £323.00/t, imported 48% Brazilian soyameal reached £376.00/t on the 27 March.
With such a great importance placed on imports of soyameal for the UK livestock supply chain, there is a need for greater focus on the global logistics and trade flows. How this global pandemic is impacting the UK agricultural sector highlights the importance and reliance upon global supply chains across all sectors.
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