We have a nice mixed bag this week starting with nickel. Then we'll chat about the "pink slime" that's currently permeating the media before moving on to cottonseed and finally soyabeans.
The cost of nickel is reported to have fallen due to poor demand and good supply. Growths in nickel inventories on the LME have been occurring since the start of November 2011. There are also reports of an unexpected fall in consumer confidence in the US and concerns over new signs of a fall in Chinese demand for nickel-rich (austenitic) stainless steel. China currently uses about 25% of all the mined nickel produced each year, but the growth in its use of nickel is going at a much slower pace than was previously anticipated. Meanwhile, the mined output of nickel has continued to grow, with further large additions to production particularly in Canada, Brazil and the Philippines expected to occur in 2012.
The price of US meat trimmings fell sharply last week with sharper falls seen for lower percentage lean meat products. This is as demand in the US fell as the debate on whether lean, finely textured beef (LFTB) or "pink slime" should be allowed on the market. LFTB is scraps of meat, sinew, connective tissue and fat obtained by mechanical separation in a heated centrifuge from the fat which is separated into liquid fat and protein paste. Once separated it is treated by heating and the use of ammonia gas to kill any remaining bacteria before it can be could be added to beef trimmings.
A series of news articles about the presence of LFTB in ground beef and other products led to a hard reduction in demand for ground meat products, particularly lower percentage lean meat products.
Cottonseed Oil (IN)
The price of cottonseed oil in India has increased by 20% year-on-year and in terms of Indian rupees, recently reached a record high. It is reported to have risen in part due to a rise in the cost of palm oil, with which it competes, and in part due to weakness in the Indian Rupee. Cottonseed oil (extracted from the seeds of the cotton plant) is favoured as cooking oil because of its relatively high smoke point (the point at which heat starts to break it down). It is often found as a cooking oil for potato chips and in a range of processed foods such as snacks, cereals, breads and pastries. Compared to many other oils, cottonseed oil resists rancidity (chemical decomposition) well and can therefore offer a longer shelf life for products in which it is an ingredient.
The price of US soyabeans, in terms of USD, has risen by 18% since the start of 2012. The price of soyabean oil in Rotterdam meanwhile, also is USD, has only risen by about 8% over the same period. The price in the US is up due to a lack of soyabeans, since production in South America is expected to decline due to drought this year and forecasts in the US point to farmers there favouring corn this year. The price of soyabean oil, on the other hand, has not shown such a dramatic increase as of yet, due to competition from other vegetable oils such as sunflower and rapeseed oil, which are expected to see increased supply this year due to improved harvests in the CIS (former Soviet States), Europe and Canada.
Next week my colleague Robert Miles and I will explore detergents and cleaning chemicals.