Market Report Pressure is on US supplies, prices, and exports By Kent Swisher Vice President, International Programs, National Renderers Association L ast year, global growth continued its decline but may have finally hit bottom. According to the International Monetary Fund (IMF), global output fell from 3.1 percent in 2012 to 3.0 percent in 2013, and is predicted to increase to 3.7 percent this year. United States (US) output is projected to rise from 1.9 percent in 2013 to 2.8 percent in 2014 while Canada should grow from 1.7 percent to 2.2 percent over the same period. Europe saw its decline in growth shrink from -0.7 percent in 2012 to -0.4 percent in 2013 and is predicted to be 1.0 percent this year. Emerging markets and developing economies saw output drop from 4.9 percent in 2012 to 4.7 percent in 2013, and is forecasted to grow to 5.1 percent in 2014. The world lost two great leaders last year, Margaret Thatcher and Nelson Mandela, and experienced many major events, such as the horrific Boston Marathon bombing in the United States; the Egyptian Army ousting President Mohamed Mursi; the Kenya, Africa, mall attack; the US government shutdown; the George Zimmerman trial; and Edward Snowden making secret National Security Agency information public. Camouflage and beards became cool last year as the stars of television’s Duck Dynasty made headlines in the United States, and new terms were brought to light, such as “bitcoin,” “selfie,” and “twerking.” Ask the teenage kids about the latter. In April 2013, the porcine epidemic diarrhea virus (PEDV) was reported in the United States with it emerging in Canada in January 2014. The virus dates back to 1971, but is new to North America and has close to 100 percent mortality in young pigs. Another acronym the US rendering industry is getting accustomed to is FSMA, which stands for the Food Safety Modernization Act. Animal feed regulations under FSMA were proposed in late 2013, with industry groups, including the National Renderers Association (NRA), working to provide official comments to the Food and Drug Administration on this new proposed rule. Finally, closer to home, NRA President Tom Cook retired at the end of 2013, a position he had held since 1997. He will be greatly missed as the industry wishes him and his wife, Judy, well in their retirement. At the same time, NRA saw the addition of a new president and chief executive officer, Nancy Foster, who is welcomed whole heartedly to the team. Domestic Developments Supply Renderers continued to see downward pressure on their raw material supply last year. Cattle inventories remained low with slaughter down three percent over 2012 at 32.4 million head, although slaughter weights continued an upward trend, up nearly one percent to 1,314 pounds in 2013. Broiler slaughter ticked up by about one percent to 8.6 billion, ending a fouryear decline in production, although still far below where it was prior to the financial crises. Hog s l a u g h t e r d r o p p e d close to one percent to 112.1 million in 2013, with s l a u g h t e r weights increasing by one pound to 276 pounds. Part of the decline in slaughter was due to PEDV. However, since the virus only affects young pigs, the full impact on slaughter numbers will not be felt until this year. The decline in raw material supplies is not only due to reduced slaughter but also regulatory changes, theft of used cooking oil, and the increased demand for edible offal for export. Production and consumption data for the rendering industry was traditionally reported in the US Census Bureau’s M311K – Fats and Oils: Production, Consumption, and Stocks report. However, due to government cutbacks, this report was discontinued in July 2011. Hence, the data in table 2 of this report was derived by the NRA using historic relationships between livestock production as reported by the National Agricultural Statistics Service (NASS) and rendered product production. Yellow grease production was derived by using the relationship between yellow grease production as reported in the 2010 report titled A Profile of the North American Rendering Industry by Informa Economics, and cooking oil consumption as reported by the US Department of Agriculture (USDA). Poultry meal, feather meal, and poultry fat production was derived using NASS slaughter data and yield data. Tallow production in 2013 is estimated at just over 2.2 million metric tons, down slightly from 2012. White grease production, which consists of both choice white grease and lard, tracked the slight decline in swine slaughter, dropping to 590,700 metric tons in 2013. Yellow grease production is estimated at 900,800 metric tons, up 1.8 percent from 2012, and includes, but is not limited to, used cooking oil. Poultry fat production was up 1.4 percent in 2013 to 481,500 metric tons. In total, the US rendering industry produced over 4.2 million metric tons of fat in 2013, valued at approximately $3.5 billion. Due to declining fat prices last year, the value of production dropped by 9.0 percent, or about $353 million. Meat and bone meal production, which includes ruminant, porcine, and mixed specie meat and bone meal, was 2.2 million metric tons in 2013, down slightly from 2012. Poultry meal production was about 1.2 million metric tons while feather 10 April 2014 Render www.rendermagazine.com
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