Not enough tryptophan in the whole, wide world
High feed costs combined with a high corn/soybean meal (SBM) price spread have created an interesting situation. It could be advantageous to reduce SBM levels and feed lower crude protein formulations based on high levels of crystalline amino acids. Crystalline forms of lysine, methionine and threonine are readily available and commonly used in swine diets. The next limiting amino acid in grow-finish swine diets is tryptophan. But tryptophan is produced in much smaller quantities.
Trytophan market influencers
Earlier this year, the market was preparing for tryptophan plant expansions in the mid-2012 to early 2013 timeframe. But then a price war developed between a traditional tryptophan producer and an emerging supplier, sharply driving down European prices. This new, lower tryptophan pricing level failed to cover production costs for Chinese producers, who consequently decided to stop production. Remaining tryptophan producers continued to forward contract at very competitive price levels to boost global demand as they anticipated increasing their future tryptophan production. As we know, the U.S. drought of 2012 caused extreme feed cost increases and high corn/SBM spreads, increasing American interest in tryptophan. Despite increased prices, Europeans continued to formulate diets with tryptophan and markets climbed throughout the summer. The only Chinese tryptophan sales were the result of selling out of remaining stocks. Western tryptophan production was inadequate to meet the explosion in demand. This all led to a drastic supply shortage. At this time, worldwide tryptophan consumption exceeded production by 700 metric tons per month or 8,400 metric tons per year. That rate of tryptophan depletion is clearly unsustainable as the increased usage alone is equal to the total worldwide supply for 2012 (see below).
Future tryptophan outlook
Chinese production has slowly resumed. However, it likely will be difficult for China to supply more than 80 MT per month for the foreseeable future. Chinese tryptophan producers have not yet purchased or developed the technology to compete long-term at the lower production costs of western producers. Therefore, they will be cautious about expanding production to levels which could flood the market and drive prices back below their cost of production. If global feed protein costs remain high, a tryptophan shortfall of 40 to 50 metric tons per month is expected to continue. This means that the limited tryptophan supply primarily will go to European markets. The limited American allotment will go to a few of the largest swine production entities. Swine nutritionists remain poised to make use of higher amounts of tryptophan and other crystalline amino acids at whatever point in the future a sufficient, economical supply of these amino acids is available. Vita Plus is regularly monitoring the situation and we have tools available to help you make the most economical decisions for your farm. If changes in price or availability do occur, we will supply the answers and products you need.
Source: Feedinfo News Service, Oct.12, 2012, “Trytophan: Supply Imbalance Continues.”
About the authors: Al Gunderson is the vice president of sales and marketing for Vita Plus. He earned his bachelor’s degree from the University of Wisconsin-Madison in meat and animal science along with his master’s degree in agricultural business management. He has been an employee owner for the past 32 years, beginning his career as a swine product manager. In addition to his sales and marketing responsibilities, Gunderson also leads the purchasing group for the Madison facility. In these roles, he works closely with the swine technical and sales team to insure the best value ingredients are provided to Vita Plus swine customers. Gunderson is the chairman-elect for AFIA, chairman on the board of trustees for IFEEDER, and a member of ASAS and ARPAS. He lives in Wisconsin with his wife, Debi. They have three sons, Greg, Adam and Andrew. Dr. Dean Koehler has served as swine technical services manager since joining Vita Plus in 2001. He was raised in southwest Minnesota and was active in 4-H and FFA. His youth livestock projects included raising and showing swine and sheep. Koehler earned his bachelor’s degree in animal science and his master’s degree and Ph.D. in swine nutrition from the University of Minnesota. His master’s research investigated the digestibility of raw soybean varieties naturally low in anti-nutritional factors when fed to growing pigs. His doctorate research utilized a stable isotope of the amino acid lysine to measure how efficiently sows transfer dietary lysine into their milk. Koehler is interested in all facets of swine nutrition. His role at Vita Plus is to provide technical service to the field and supervise the development of support tools, such as technical bulletins and spreadsheets. Additionally, he is the author the Vita Plus online grow-finish feed budgeting software, mentor.
Markets and economics