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US Drought Impacting on Fish Feed Industry

Nutrition Health Economics +1 more

ANALYSIS - The current dry weather in the US is drastically impacting on the soybean crop. With yields down and prices rising, the situation is affecting the fish feed market which large and small aquaculture businesses rely on, writes Lucy Towers TheFishSite Editor.

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The USDA's Crop Condition figures clearly outlined the devastating affect the on-going drought is having on crop quality.

During the drought last year, farmers thought the worst as the quality of soybean crops dropped.

The outlook for this year looks set to be worse than last year with around 34 per cent of US soybean acres being rated as Good or Excellent condition, a drop of six per cent from last week and 30 per cent lower than last year.

Despite a low supply of soybean, the latest USDA WASDE Report states that demand continues to rise, with soybean exports for 2011/12 rising 20 million bushels, led by a strong demand from China.

The report also forecast the US season average soybean meal and oil prices at $335 to $365 per ton and 52.5 to 56.5 cents per pound, respectively.

Globally, oilseed production for 2012/13 is estimated at 470.8 million tons, down 0.7 million from last month, mainly due to lower soybean production.

Argentina's soybean production has also been reduced one million tons, whilst Chinas soybean production been reduced to make way for corn plantations.

Executive Director of the Soy Aquaculture Alliance, Steven Hart, stated that with the proportion of soy in fish feed being between 10 to 50 per cent, depending on fish species, the increase in soy price is heavily impacting on fish feed price.

According to BioMar Executive Vice President, Niels Alsted, for fish farmers the rising price of feed is a concern as roughly 50 per cent of aquaculture production costs are spent on feed. The prices paid for fish are also unlikely to rise in correlation with the increasing feed costs, therefore have a major impact on farmers, especially those who farm low priced fish.

The salmon industry, which has been struggling with low prices during the past year, is likely to be negatively affected.

With the US drought looking to continue, all hope is now pinned on Brazil which has reported an increase for the 2011/12 soybean production at 65.5 million tons.

The feed industry expects the effects of the soy price increase to come into effect in quarter four of 2012.