Bio-Fuel Factor Getting Bigger

VANCOUVER - Dec 21/07 - SNS -- European feed pea markets finished the week's trading on a mixed note, with inter-dealer and grower values rising on the Continent in local currency terms, while grower bids in the United Kingdom eased on the week.

Tightening stocks and moderate competitive demand for field peas and beans continues to give pulse markets in the region a firm undertone. While forcing regional consumers to pay more, the tight supplies around the world has already forced compound feed manufacturers to actively seek replacement products for peas in rations.

As much as peas are a valued part of livestock rations, prices need to be competitive with the full range of products available for use and supplies need to be consistent throughout the year to encourage and retain interest.

The long term outlook for feed ingredient markets remains strong, helped by the latest U.S. energy bill signed into law by President George Bush during the week. It mandates the production of 16 billion gallons of ethanol by year by 2016 and 20 billions gallons of other types of biofuel, including bio-diesel, by 2022 -- a fivefold increase over the mandate signed into law two years ago.

Reaching those targets will result in no reduction in the war between corn and soybeans for land base in the United States anytime soon. At the moment, feed ingredient and agriculture commodity markets seem to defining new normals for price and production levels. Ultimately, this will result in a re-valuation of the price at which peas can be readily incorporated into livestock feed rations.

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