FEATURE: Animal feed prices rise in the Americas amid tight supply, logistical risks

Animal feed prices in Latin America increased during the week to April 10, as supply has tightened in markets like Argentina, while higher fertilizer costs and looming logistical issues have supported dried distillers grains with solubles in the US.

Platts, part of S&P Global Energy, assessed the Argentine FOB Up River and the Brazilian FOB Paranaguá soybean meal prices for May loading at $372.36/metric ton on April 10, the highest levels for each origin since Oct. 7 and 8, 2024, respectively. This comparison considers spot shipments.

Export prices were supported by a 5% jump in CBOT futures on April 10. At the time, analysts cited a round of technical buying amid rising demand and logistical concerns for US shipments.

However, the South American soybean meal market has already shown strength for several weeks, in contrast to the usual seasonal pressure expected at this time of year as Brazil finishes its soybean harvest and Argentina begins its own.

The pace of harvest in Argentina, the world's largest soybean meal exporter, has raised some concerns about the availability for short-term commitments.

The Buenos Aires Grain Exchange said April 9 that rains continued across "most of the agricultural area" over the past week, slowing soybean harvesting activities in Argentina. By April 8, only 2.4% of the anticipated acreage for this year had been harvested.

"Quite some books done, big April line-ups, harvest stopped due to rains, physical soybeans availability scarce [...] Until this accommodates, support is there," an Argentine-based broker said regarding the firmness of FOB Up River. "There is still no big flow of soybeans."

This adds to the logistical problems Brazil faced in March. Last month, the increase in diesel prices caused by the conflict in the Middle East impacted the road transport of products to port terminals.

Soybean meal export premiums in both Argentina and Brazil illustrate the tighter supply. Platts assessed the basis for FOB Up River and FOB Paranaguá at $6/short ton over the CBOT benchmarks on April 10, while a year ago, the differentials were roughly at par with the reference futures.

High origin prices boost European meal

Europe, a major importer of soybean meal from South American origins, is currently experiencing elevated prices, according to traders across the region.

Market participants attribute this trend to tight supply conditions at origin, which continue to influence pricing in European markets.

Platts assessed soybean meal FOB Netherlands at Eur 354/mt and ex-works Tarragona at Eur 373.25/mt on April 10.

An Amsterdam-based trader highlighted that Argentina's transition period remains particularly constrained, further limiting availability.

The premiums for April-May shipments from South America are higher than usual, a Spain-based trader said. While seasonal price strength is typical for these months, delays this year have disrupted the usual market push from the region, he added.

As a result, the market has moved into an inverse structure, with April prices trading Eur6-10/mt above May across Europe.

In the Netherlands, previously delayed soybean meal shipments from Brazil are now arriving, providing some relief and improving nearby supply, traders said.

However, in Spain, tighter availability has driven prices higher, although incoming vessels are expected to help meet demand across ports.

DDGS rise on input costs uncertainty

Rising fertilizer costs and logistical risks tied to geopolitical tensions are beginning to impact the US DDGS market, reinforcing broader cost support despite uneven demand.

Platts assessed CIF New Orleans DDGS barges at $231/st for the April shipment period on April 10. The Chicago DDGS truck market for the same delivery period was assessed at $200/st, and the Southern California rail market for the April delivery period was assessed at $249/st.

Market participants said disruptions and risks around key trade routes, including the Strait of Hormuz, are affecting the flow of nitrogen- and sulfur-based fertilizers, key inputs for global crop production.

"A significant portion of nitrogen and sulfur goes through the Strait of Hormuz," one broker said. "The US lacks a strategic fertilizer reserve," the same broker mentioned, pointing to a vulnerable structure in the US market and the concerns about availability.

Additional pressure has come from export restrictions in major producing countries, with China limiting shipments to support domestic supply, tightening global availability.

Also, higher energy prices have been a key driver. Traders said rising crude values have increased operating costs for vessels and contributed to higher freight rates, complicating export pricing and reducing visibility for forward shipments. "It's changing constantly, so there's really no definition," one broker said, referring to the evolving fuel and freight situation.

These dynamics are contributing to higher input costs across the agricultural complex, indirectly supporting feed markets including DDGS. Stronger fertilizer prices can influence crop economics, particularly for corn and soybeans, which in turn shape DDGS cost and relative value in feed rations.

At the same time, rising logistics costs, including freight, trucking, and handling, are adding to the overall cost structure for DDGS. Suppliers said these increases "add up in a hurry," reinforcing higher prices even during periods of weak demand.

While the direct impact on DDGS trade has been limited so far, participants said the broader cost environment is helping underpin values, particularly in nearby markets where supply remains tight.