Lysine shortage fears fueling soymeal rally

Concerns about a lysine shortage in the U.S. have fueled a strong rally in soymeal prices to the highest levels since summer. One U.S. firm lost a barge of lysine during Hurricane Ida, while imports of dry lysine from China are snagged up with logistical issues and supply reductions. There are concerns China could shut off lysine exports.

Lysine shortages would increase soybean meal use in feed rations. A swine nutritionist told us a worst-case scenario in which the market completely runs out of lysine could increase soybean meal use by 50%. But that’s a worst-case and not likely to happen.

A cash soybean meal source told us, “Dry lysine is very tight. Liquid is not an issue. Some accounts are legitimately short, though the large majority are still getting product.” He indicated a “deep dive” by his company showed meal demand was “dead steady” versus a year ago at his company’s mills, while the trading group’s tonnage was up 1%. Some of his company’s accounts are up 20% to 30% or more on meal use due to lysine shortages, though others are down year-over-year.

The cash meal source concluded, “The shortage is real, so I don’t want to downplay it, but I would say the market is blowing the situation out of proportion.”