News

Q4 2019 Market Updates

Proteins

      Poultry Meals – Chicken and Turkey seem to be in a state of flux currently. While the soybean complex is soft, the protein meals are holding fairly steady at this time. These two markets generally follow each other but for forward contracting they seem to be more disconnected than in the past. No one is ready to call 2020 markets at this time, but it has the feeling of being flat going forward.

     Novel Proteins – Lamb has been soft, and now is a good time to get us annual volumes to look at locking in forward contracts against. Doesn’t seem that this market has much more downside potential for 2020 contracts, advice is to look at locking down some level of your needs

     Pea Protein – DCM has taken it’s toll a bit, no one wants to step out too far on contracts and has caused pea protein manufacturers to soften a bit on their pricing. If going forward with this material for 2020 time to take positions will be in Q4 and probably sooner rather than later to lock down your needs.

Pulses

Harvest has been slow in Canada due to early snows and late rains that caused some sprouting and other quality concerns. US pulses look pretty good and yields look solid. If you have needs now is a good time to lock in for 2020 needs. The downside potential is de minimis at best, but the upside potential is risky if you have need for pulses. I would not go too long a crop to crop contract with either a traunch or up to 50% would be warranted at a minimum.

Starches

Tapioca crops in SE Asia have been experiencing some issues with Mosaic Disease which causes root damage. This isn’t a huge risk to the first crop, but the second crop has more risk to it. Now is a really good time to take some positions and get some price risk off the table. Minimum 50% coverage would be advised for this material and if comfortable to the pricing 75% is warranted as the second crop may cause prices to rise.

General Note

Overall the impressions in the market are a bit soft for the big movers and now is a good time to take a look at your 2020 needs and get some underlying contracts in place to take risk off the table for your budgeted needs. There are some interesting dynamics to agriculture overall due to the outcome of China/US trade negotiations. If trade war ever breaks the glut of supply on certain ingredients would most likely be sucked up pretty quickly into the export markets as people look to recoup lost sales during the trade war but once that excess supply is gone the market will pop up quickly. We’re a big advocate of eliminating price risk where possible and when staring at 5-10 year lows on some ingredients why not move forward with the budget buys whenever possible. The downside potential overall is low and the upside is risk that could turn on us all quickly.