Wheat harvest(c) Rex

Low milk prices and pressured livestock margins are forcing farmers to think more carefully when buying feed, traders have suggested.

High soya supplies are keeping protein prices in check, while spot feed wheat prices are well below £120/t ex-farm. But cashflow pressure has caused producer caution when locking-in feed costs.

Anglia Farmers’ feed and raw material manager Phil Garnham said lower wheat prices meant that trade was busy but dairy farmers particularly were more hesitant.

“If the price of soya is sub-£300/t what are you waiting for? You haven’t had it there for three and a half years now.”
Phil Garnham, Anglia Farmers

“I have seen a real lack of forward-buying,” he said. “They are very cautious about booking forward when they are not sure what their milk prices are going to be.”

But Mr Garnham said he was “cautiously bearish” about protein prospects, but farmers could avoid the gamble and buy cover into next winter if lower prices were available.

“If the price of soya is sub-£300/t what are you waiting for? You haven’t had it there for three and a half years now.”

KW Alternative Feeds’ Chris Davidson said tight business margins could prompt a “fundamental shift” to thinking about feed values, rather than cost per tonne.

“It’s a trend that’s likely to grow through the spring and summer as farmers renew efforts to find the most cost-effective way to feed livestock,” he said.

“Those able to adapt feeding systems to make good use of the best-value feeds, and who are prepared to book forward contracts when appropriate to secure a price or supplies, will most likely be the ones with the lowest overall feed costs at the end of the year.”

For protein feeds, soya bean supplies were still expected to be high, with falling prices over the year, but there are short-term jitters.

Strong US production could be followed by a record Brazilian crop, though striking truckers could strain fuel supplies just as the South American harvest begins.

HiPro soya meal was quoted midweek at £320-£331/t for March-April, with £20/t discounts for May-October and into the winter.

Rape meal still looks expensive compared to soya, at £197-212/t for March-April and dropping into the £180s and £190s for May-October.

Traders picked out soya hulls as a good-value buy this week, at £130-140/t into the summer. On energy feeds, wheat prices remain under pressure from strong supplies.

Russia’s recent wheat export restrictions will have only a limited impact, as full season shipments are still forecast to be 12% higher on the year at more than 21m tonnes.

London May-15 feed wheat futures were trading at £118/t as Farmers Weekly went to press – almost £5/t lower on the week.

Brigitte Fifield, general manager at buying group Southern Farmers, said farmers were active in the market but spending carefully.

“Farmers are very keen on having forage analysed, because if they get very good quality forage there is no point spending money on things they do not need,” she said.