Protein prices have continued to rise in recent weeks with the possibility that they could yet go even higher. As a result, very few buyers are currently booking large volumes in advance. Instead, they are concentrating on immediate requirements, up to 2 months in advance, and searching for the best deals on the market, writes KW’s Chris Davidson.
The opportunity to save a few pounds per tonne as the market fluctuates is the best news at present, and it is important that buyers look at the feeds they need as a ‘basket’ of products, rather than focusing on individual products. For example, maintaining 50% cover a month ahead for proteins doesn’t have to mean 50% of soyabean meal requirements, 50% of rapemeal requirements and 50% of distillers’ feed requirements.
If one or the other is better value, book more of that now and perhaps less of the others, whilst still maintaining an overall level of ‘protein’ cover you are comfortable with going forward. And do the same for energy feeds, starch and digestible fibre.
As always, look for those dips in the market that represent better buying opportunities, booking perhaps 10-20% of requirements at any one time to spread the risk. The exception is when availability could be a problem, in which case getting up to 100% secured in advance is often the right move, even if only 1-2 months ahead.
In terms of market specifics, little has changed overall. A recent forecast by Oil World put the European oilseed rape crop at a five year low of about 18.5 million tonnes (mt) as a result of significant winter kill in Germany, France and Poland.
Even last year’s poor harvest produced 19.1mt. This could impact the total volume of rapemeal available this coming season, but at the current prices it is hard to see buyers reacting to this news by increasing their purchases. At £196/t, the current discounted price for August-October delivery is still far from attractive, with the £215/t for May-July contracts even less so.
For soyabeans, the Brazilian harvest is now 85% complete, with 38% of the Argentinean crop also secured, though yields continue to disappoint. The Argentine Ministry of Agriculture has now reduced its soyabean crop estimate to 42.9mt, compared to a current United States Department of Agriculture (USDA) prediction of 45mt.
There are rumours of some US corn plantings switching to soyabeans following a slight fall in corn values, but overall planting estimates will not now be updated by the USDA until June. Global demand remains strong, with Chinese soyabean imports for the last six months thought to be 12% higher than the previous year.
It is a difficult time for proteins at the moment, with spot availability of both rapemeal and distillers’ feeds very limited. There is still some Scottish barley distillers’ feed available for the next few months, so booking ahead to secure supply could be worth considering.
In contrast, the combination of rains throughout Europe and favourable conditions in the US allowed wheat and corn futures to settle a little. However, China used the lower corn price to purchase a significant volume of old crop US corn, which pushed prices back up.
Globally, the wheat harvest looks likely to produce a similar volume to last year, rather than the bumper crop many were hoping for. Depending on Chinese demand, it’s hoped that there will be enough overall volume of cereals to meet demand once the northern hemisphere harvest begins.
For those livestock farmers needing energy feeds for the summer, liquid feeds remain one of the best value options at the moment, with wheatfeed also selling well at about £145-150/t. And whilst sugar beet feed prices have lifted slightly in recent weeks to the high £170s/t, they remain a better buy than soya hulls at present.
Keep up to date with the latest from the feed market and the best feed options available on our Feed Watch page.