The US Butyric Acid Prices Fall Against Ample Supplies in the Market

The US Butyric Acid market witnessed a depreciation of approximately 10% during the first three weeks of the opening quarter of 2024. The slump in the prices of Butyric Acid was attributed to the absence of cost support from the production side, low demand from the animal feed industry, and prevailing post-festive dullness after the termination of the festive Easter Season during the middle of April 2024.

Early in 2024, profit margins for feedlots and stockers went negative; for cow-calf producers, however, margins may not have gone negative yet due to rising costs and borrowing rates. This eventually has also made purchasing new stock more difficult, which may further weaken the demand of Butyric from the downstream animal feed industry. Also, inventories for beef cows and heifers continued to decline, signaling that market and financial conditions have been more conducive to selling heifers and cows than retaining them thereby waning the demand for Butyric Acid from the animal feed industry. Also, in early April 2024, U.S. wildfires in Texas and Oklahoma have caused more losses to the livestock industry; it is anticipated that thousands of animals have died along with other enormous damages. Overall, this led to a low demand of Butyric Acid from the downstream animal fodder industry. The only positive demand for Butyric Acid arose from the food and flavoring sector during which purchasing activities amongst the local populace increased due to the prevailing Easter Festival. However, this demand gradually weakened after termination of Easter Season during mid-April 2024, thereby leaving the US Butyric Acid market without any support. Moreover, the continued depreciation in the prices of the Butyric Acid is attributed to the low demand from the downstream animal feeds production sector. According to AFIA (American Feed Industry Association), North America witnessed a depreciation of 2.8 MMT (252.96 MMT, -1.1%) with beef tonnage being down significantly due to low demand from the international markets.

Amidst elevated production activities and moderate demand, the inventories of Butyric Acid were recorded to be in excess which compelled prices of the product to decline. In terms of manufacturing activities, both the industrial and service sectors saw slower gains in activity, with growth rates slowing to three- and five-month lows, respectively.  Despite only slightly declining, new orders fell for the first time in six months, which caused output growth to slow down in tandem with the weakening demand for Butyric Acid. A decline in new business was noted by both manufacturers and service providers.