World Grain - August 2022 - 49

culling 10,000 sows, with a further 12,000 sows deemed
at high risk of destocking over the coming weeks. "
Similar problems have been seen in the broiler meat
and turkey segment, where producers also complained
about the soaring feed costs and dwindling profitability,
Teagasc added.
Shock waves on the meat and milk market
In France, pig farmers initiated a protest rally voicing
fears of massive bankruptcies even before the
Ukrainian crisis unfolded. In January 2022, a group of
pig producers blocked the route nationale 12, demanding
urgent state aid. The farmers claimed that they had
to sell pork at a loss and that the government must urge
supermarkets to agree to the price that " covers production
costs. "
Pulay said some farmers in Europe already have been
in a dire situation before the Ukrainian crisis, working
at a loss in 2021.
" Pig industry was the most impacted, " he said.
" Ever since (early 2022), we have been seeing livestock,
eggs and milk prices rising, which gave a hope
for survival to many livestock farmers, " Pulay said, expressing
confidence that retail food prices must follow
the upward trend in order to keep livestock farmers in
business. " Higher food price inflation is unavoidable. "
On the other hand, livestock producers fear raising
farm-gate prices sharply, worrying about losing their
customers. Skyrocketing retail prices could undermine
food consumption across some countries of the
European Union. A constant struggle for the best offers
creates fierce price competition in the livestock markets
of some European countries.
" In Italy, there are about 2.8 million heads of milk
cows, " estimated Antonio Nicolosi, general secretary
of Italian dairy firm Uniarma. " The crisis could
provoke a rise in prices and a drop in consumption,
which would force farmers to further slaughter at least
150,000 heads of cattle. "
Ethanol production targets questionable
As explained by Pulay, what feed producers need is
more grain at more affordable prices, and there are
several ways this could be achieved. Under normal
weather conditions, Hungary produces enough grain to
not only meet the domestic demand for feed but also to
export a surplus. However, over the past decade, huge
investments were pumped into starch and ethanol production,
so as of today more than 40% of Hungarian
corn is used to produce ethanol.
" This is a huge number, " he said. " It changes
trade flows. "
He said over the past few years grain exporters have
had to source some grain from the neighboring markets.
World-Grain.com / World Grain / August 2022
Soaring commodity prices, not only
of grains but of oil meals, freight,
trace minerals, energy and so on,
have immensely increased our
premix and feed formulation costs.
Zoltan Pulay, purchasing director of UBM Feed Ltd.
Rising food and fuel costs are pushing several EU
countries
to
freeze or lower 2022-23 low-carbon
blending mandates for transportation fuels. However,
European fuel ethanol demand in 2022 is expected to
rise 10% to 6.49 billion liters, while production will
increase 4% to 6.016 billion liters, research conducted
by S&P Commodity Insights showed.
Paradoxically, the current geopolitical situation only increases
the demand for grain from the ethanol refineries,
as the EU countries struggle to wean off the Russian oil
supply by 2023. Given that the global oil prices currently
hit the highest level in the past decade, ethanol producers
can provide effective demand for raw materials.
" The EU's plan to rapidly reduce dependence on
Russian fossil fuels and fast forward the green transition
is setting in motion higher targets over the decade
and beyond, " explained Cornelius Claeys, an analyst at
the global consulting firm Stratas Advisors.
However, in Central Europe, the grain shortage
could be partly offset thanks to growing supplies of
Ukrainian corn by train. Ukrainian grain is directed toward
the seaports of Bulgaria and Romania, but some
quantities also tend to land on the Hungarian market.
" For the well-known reasons, Ukrainian corn can
leave the country (only) via rail towards west, " Pulay
said. " Although the infrastructure is way below the demand,
I think this flow will play a significant role in our
market. In other words, we expect lowering domestic
corn prices slowly but surely. "
Still, the future holds more questions than answers
for the European feed industry, especially since the
EU faces a disappointing wheat harvest this year, owing
to dry weather, some preliminary analytical reports
suggested. Assuming the bad forecasts come true, the
global grain supply could tighten even further in the
coming months.
Vladislav Vorotnikov is a correspondent from Batumi, Georgia.
He may be reached at Vorotnikov.vlsl@gmail.com
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