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Why All the Fuss Over the Lysine Shortage?

Mary Kennedy
By  Mary Kennedy , DTN Basis Analyst
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Soybean meal prices have been rising as an essential additive, dry lysine, has become difficult for feeders to obtain. (Photo courtesy of the U.S. Soybean Export Council)

A shortage of synthetic lysine additive, which is used in feed compounds, has sent soybean meal prices soaring recently.

Lysine/L-lysine is an essential amino acid and is used to address nutrient requirements and improve performance for animals in agricultural production. It is used in pig diets, feed for poultry and for dairy cattle.

The cause of the recent shortage of dry lysine has many reasons, with one being production issues. ADM announced in mid-December 2020 it would end production of dry lysine in the first half of 2021, "focusing solely on customer needs for liquid and encapsulated lysine products."

Iani Adrian Chihaia, president of the ANFNC, Romanian Feed Association & USSEC regional consultant for Southeast Europe, told DTN via email, "We feel like that the current shortage is not a supply problem only. As in any crisis situation, there are also speculators who are taking the advantage to increase their margins. Several lysine manufactures in China have stopped offering the product, claiming to be sold out. As a reaction to this, some traders started selling the available stocks at increased prices."

Chihaia said among the key factors causing the surge in prices for Lysine/feed additives, in general are:

1. Stringent COVID-19 lockdown regulations across several nations.

2. Disruptions in import and export activities of L-Lysine.

3. Global shipping problems.

4. High concentration of the lysine manufacturing capacities, with China being the No.1 player in this industry, taking a market share of over 65%.

5. High demand in China due to rebuilding the swine herds in China.

Chihaia, who is extensively involved with the leading feed and livestock companies in Romania, said, "On the short term, there are signs that after the New Chinese year things might ease a bit. On medium term, I believe that from now on the purchasing managers will continue to have more and more difficulties in finding the ingredient at the lowest possible price. On top of this, receiving it in due time will be probably the biggest challenge for at least as long as the COVID-19 outbreaks will continue to occur, and lockdowns will be required.

"In the long term, I believe that the era of the classic 'supply & demand' has ended. At this moment, we are no longer talking about a classic competitive market, determined by supply and demand. The world's goods flows are blocked by the transport and delivery capacity, deadlines and supplies for component products (parts, supply), a fact that fundamentally affects the global economy, pushes inflation and especially towards the global economic crisis."

Chihaia said soy in animal nutrition is his top favorite topic simply because soybean meal is the number one supplier of digestible lysine in broiler feeds (broilers being the number one species consuming soy).

Dr. Scott Carter, an animal nutritionist who has spent his career focused on formulating animal feed, said in an Aug. 1, 2019, U.S. Soybean Export Council (USSEC) article on "If we fed a bird only soybean meal, and the amino acids aren't balanced for what the bird needs, some of that protein will go to waste."

According to USSEC, protein complementation, often practiced by animal nutritionists, combines protein sources to ensure all the amino acid needs are met. The amino acids -- lysine, threonine, methionine and tryptophan -- are required in all formulations. "If a diet has inadequate amounts of any of these essential amino acids, protein synthesis cannot proceed beyond the rate at which that amino acid is available. Therefore, digestible and metabolizable amino acid calculations must be a consideration with different protein sources."

Dr. Jason Woodworth, research professor at Kansas State University (KSU) while speaking at KSU Swine Day on Nov. 18, advised pig producers who hadn't already made feed formulation adjustments because of the dry lysine shortage would be wise to do so before they no longer have a choice.

"If you're not experiencing a lysine shortage, great. I don't know what you're doing, but you're one of the lucky ones," said Woodworth. "The shortage is something that you need to really be aware of."

In an Oct. 15 article titled, "It Bears Repeating: Soybean Meal Prices Are Cheap" DTN Lead Analyst Todd Hultman noted U.S. ending soybean supplies are estimated at 320 million bushels (mb) for 2021-22, a comfortable but not excessive amount. "There is plenty of uncertainty in the season ahead and we have not yet seen China's demand, but early indications look promising. As usual, I can't guarantee soybean meal prices will go up from here, but for a wide variety of producers who need to buy meal for their feed mix, I have to point out that you are currently being offered the cheapest prices in over a year."

Soybean meal prices have soared in the short time since Hultman's comments. Fast forward one month to Nov. 19 when front-month soybean meal price closed at $371.80 as the lysine shortage has sent the market into a frenzy.

Here is a link to Hultman's Oct. 15 article:…

Here is a link to "All Soybean Meal is Not Created Equal", USSEC:…

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