Market report: Rising feed bills to hit dairy farm margins

Dairy farmers’ feed bills are unlikely to fall this year, which is likely to put pressure on margins, according to DairyCo’s Datum service.

Feed prices remained relatively stable between February and March, with Hi-pro soya increasing by 1.4% to average £292/t. Feed wheat was the only commodity to weaken in price, dropping by £6/t to £102/t, it said.

“The straights feed market has seen some small price rises over the past month, mainly due to rises in raw material costs.” Rapemeal increased by 3.1% to £199/t – £21/t above the same period last year.

With farmgate milk prices remaining lower than last year, farmers could see further pressure on margins. “Industry commentators also suggest that feed price rises may differ considerably in different regions – with the south west having less capacity, prices may have a larger increase.”

Demand for dairy feed was stable in the last quarter of 2009, but increased in the first two months of 2010. “This increase may impact on future feed prices, dependant on supply volumes.”