Download Report IHS CEH Report : Animal Feeds: Nonprotein Nitrogen (NPN) Supplements (Chemical Economics Handbook 2019)
PDF by S&P Global Commodity Insights; IHS Markit
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Format: PDF Language: English Pages: 78 Publisher: S&P Global Commodity Insights; IHS Markit Publication Date of the Electronic Edition: 2019
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ISBN: 128483
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Description
China, the United States, and Central and South America account for the vast majority (about 90%) of the global consumption of nonprotein nitrogen (NPN) in animal feeds. Although there are many regions with large cattle populations, most of these other regions consume very small quantities of NPN, particularly Mexico and the Middle East and Africa. In the United States, growth in the consumption of NPN in the feed market has resumed since 2013, after bottoming out from a continuous decline that began a decade ago. The exponential growth of the fuel ethanol industry resulted in a flooded supply of distiller's dried grains and solubles (DDGS) as a coproduct. The majority of DDGS went to the cattle industry as a cheaper feed supplement option to energy and protein, reducing demand for NPN, which is also a source of crude protein supplement for ruminant animals. However, because corn oil has been qualified as a biodiesel feedstock since 2013, more ethanol plants have installed facilities to extract corn oil from distiller's grains, but corn DDGS has a reduced nutritional value. Feed supplement suppliers have been increasing the NPN content since then. The US cattle population is likely to remain stable at current levels, which will also support NPN demand.Nonprotein nitrogen (NPN) is a term used in animal nutrition referring collectively to components such as urea, biuret, and ammonium bicarbonate that are not proteins, but can be converted to proteins by microbes in the ruminant stomach. NPN is used primarily for animal feed supplements in ruminant diets as a crude protein source.
The global NPN market is estimated at 2.0 million metric tons with a market value of $0.8 billion in 2018. Urea is the primary product, accounting for 85% of the market share. NPN products such as urea, ammonium polyphosphate, and ammonium sulfate are produced by fertilizer companies as part of the ammonia value chain. They are used mainly as fertilizers or in industrial uses, and to a much lesser extent (less than 5% of total consumption) in the animal feed market. There are no supply-side constraints for the NPN products, not only because they represent a very small part of the ammonia value chain, but also because of oversupply in the fertilizer industry in recent years. The pricing trend of NPN also follows the fertilizer market, which is related to ammonia feedstock costs such as natural gas or coal prices.
Global NPN consumption is concentrated in China, the United States, and Central and South America, which account for 37%, 35%, and 19% of total NPN demand, respectively. The key market developments in the major regions are summarized below:
In China, NPN consumption in the feed market is maturing as growth normalizes. Demand is expected to decline slightly mainly because of a mild decrease in Chinese cattle populations over the next few years. Although China also produces distiller's dried grains with solubles (DDGS) as a coproduct of the corn ethanol industry, DDGS use in the animal feed market is mainly in aquaculture subsectors (around 40%) and ruminates, poultry, and swine. DDGS availability in the Chinese market is currently limited, as the government protects local DDGS producers by imposing antidumping taxes on US-imported DDGS products. But along with the development of China’s fuel ethanol, more DDGS with reliable quality and competitive prices will be produced. Greater DDGS production and consumption may lead to a decline in Chinese NPN consumption.
In the United States, consumption of NPN in the feed market has grown since 2013 after bottoming out from a continuous decline that began a decade ago. The exponential growth of the fuel ethanol industry resulted in an excessive supply of DDGS as a coproduct. The majority of DDGS went to the cattle industry as a cheaper feed supplement option for energy and protein, reducing demand for NPN, which also serves as a crude protein source for ruminant animals. However, because corn oil has been qualified as a biodiesel feedstock since 2013, more ethanol plants have installed facilities to extract corn oil from distiller's grains. As a result, the nutritional value of DDGS is reduced. The animal feed industry has noticed animal performance issues after feeding them low-oil-content DDGS. Since then, feed supplement suppliers have been increasing their NPN content, which resulted in a rebound in NPN consumption. The US cattle population is likely to remain stable at current levels over the next few years, which will also support NPN demand.
In Central and South America, Brazil drives NPN consumption, with urea being used widely. Feed urea consumption gradually decreased in Brazil in 2011–13 on the back of declining use in the feed supplement sector. NPN consumption recovered in 2014–18, and future growth will be pegged with a mild expansion in the cattle population. The region will be self-sufficient in meeting higher demand over the next couple of years.
In Other Asia, urea is also the primary product used for NPN. India is the major producer and consumer of feed urea. India's cattle industry is transforming from small fragmented farms to large organized farms with animal nutrition knowledge. NPN utilization in ruminant animals is growing from a relatively low base. Consumption is expected to increase steadily on the back of higher per-cattle consumption as well as the expansion of the livestock feed market. As supply of NPN is not constrained, this is unlikely to affect the market supply/demand balance or prices in India.
In Europe, NPN consumption has been stable. The decease in the consumption of other protein feedstocks such as soybeans could lead to an increase in the consumption of NPN feeds. The NPN market is expected to remain balanced.
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