8 August 1997

Buyers market, indeed…

With plentiful supplies of forage, and cereals and straights at least 20% cheaper than last year, prospects for reducing winter feed bills look good. Our special kicks off with a look at alternative feed availability and confirms it is a buyers market

LACK of confidence on the part of producers means that even cheaper straight feed prices are failing to tempt them to take cover for this winter.

The volume of feed booked through the winter ranges from an estimate of less than 20% in Scotland to about 50% in south-west England.

"There has been little activity in the past month," says Ian Tremain, raw materials trader of south-western co-op Mole Valley Farmers. He believes farmers are holding off due to lower milk and beef prices, and cheaper cereals.

"The drop in cereal prices is the key issue this year and is driving down other feed prices," says KWs Dave Forster.

Most straights are costing at least £25-£35/t less than a year ago – 25% down – and availability is good on almost every category of feed, he says. Energy feeds, in particular, are at high stock levels.

Apart from the impact of lower beef and milk prices, the market is further weakened by high yields of first-cut silage and the anticipation of an increase in the use of home-grown grains.

More wheat and barley will be used on farm for two reasons – first, it is good value and second, growers are unwilling to sell it on to a market that is offering just £73/t ex-farm for wheat at harvest and about £4 less for feed barley.

But it is difficult to estimate just how much more home-grown grain will be used. The wheat harvest is forecast to repeat last years 16m tonnes, and there will be a carryover of about 500,000t of old crop wheat.

Imports cheaper

As the £ has risen in strength through the year, so prices of imported feeds have fallen and so have UK grain prices.

No trader is willing to say whether we have seen the bottom of the market, but most advise taking some cover at these low price levels, especially if your budget says it will give an acceptable margin.

"Many factors being seen would appear bearish to many commodities, but at some stage these historically low prices are going to start increasing, and when they do, they will probably go quickly," says straights trader Rupert Stafford of NWF Agriculture.

But, this is unlikely to happen on energy feeds such as wheat, citrus and sugar beet pulp until harvest pressure from new crop grain reduces.

US corn and soya crops are both forecast to produce high volumes, and the strong £ is helping to maintain both soya and maize gluten at competitive levels.

"World prices are expected to be more volatile due to relatively low stock levels and the increasing impact of Chicago grain and soya speculators, who have massive funds available to play the market," says Mr Stafford.

As for gluten, Mr Tremain says that at £84/t ex-Avonmouth through the winter, it looks good value. Citrus pulp is also keenly priced at £64/t, but make sure of the basis on which it is being supplied, he says. Most citrus pulp traded in the UK is guaranteed 95% orange, and that should be a minimum for palatability.

"There will be more cereal grains in cow diets this winter, both because of cost and the positive effect on milk proteins," says Mr Tremain.

Across the main commodities prices vary according to region and delivery charges, but maize gluten is in a range from £88 to £92/t for 25t tipped loads to farm and for a commitment through the winter, says Mr Forster. On the same basis, Hipro soya is £190/t ex port or £198-£199/t delivered.

All old crop soya prices (July to October) have firmed due to strong demand from Europe, China and the Pacific Rim.

New crop comes into Europe in November; future prices will depend on weather in the next two weeks, the critical stage of plant development, currency changes and demand from other world buyers. Potential remains for a bumper North American crop.

Meal and pellets.

Home produced rapemeal is £102-104/t delivered and citrus pellets are priced from £70/t delivered, with sunflower pellets at £88/t.

Home produced sugar beet pulp prices have recently been released, putting this feed on to farm at a typical price of £83-£88/t, depending on proximity to the factory, for a commitment through the winter.

For those with a short haul from the maltings, wet brewers grains can be bought for about £16/t spot, depending on the region. Winter prices are expected to be about £20-22/t delivered.

Mr Forster advises buying moist feeds now while prices are cheap. "Moist feeds are a great deal at current prices and will increase the range of feeds fed this winter, optimising low cost cereals and large stocks of forage." Feeding too high a level of cereals will reduce forage intakes, he warns (see panel below).

Distillery by-products such as Vitagold and Supergrains are phenomenally price against dry feeds. Vitagold which is 14.5 ME and 34% crude protein and priced at about £37/t delivered for the summer is equivalent to a high protein and energy concentrate at £90/t.

Bread waste is another high energy feed worth considering, says Mr Forster. It is now a good buy at £50/t, with good availability nationwide, and equivalent to buying wheat treated and ready to feed at £66/t.

It also has a higher feed value than wheat at 14 ME, with a similar crude protein at 12%. It can be clamped with brewers grains, he says.

Cane molasses are unpriced as yet, but are expected to be about £100/t for 10t loads delivered to farm.

Plentiful supplies of forage will be supplemented with more home-grown wheat and barley this winter.

FEED OUTLOOK

&#8226 Most energy feeds are costing £20/t less.

&#8226 Proteins variable due to soya volatility

&#8226 Increase in use of home-grown cereals.

Cereal tips

Low-cost cereals can make a major contribution to rations this winter but producers should be cautious about inclusion rates.

Wolverhampton-based independent nutritionist Stuart Jones warns that care is needed when using cereals alone as a midday feed, or when the diet includes whole-crop cereals or maize silage.

"When cereals are fed as a straight feed to hungry cows they can be consumed too quickly, causing acidosis. And when cows are fed forages containing grain, such as whole-crop cereals or maize silage, cereal levels should be kept at 1-2kg a cow a day, depending on the levels of the forages fed."

Mr Jones says most producers feeding grass silage-based rations can feed up to 4kg of cereals a cow a day when mixed with other feed, helping to reduce acidosis risk. This level should be safe in a balanced diet even when a cereal based compound is being fed at up to 4kg a day in the parlour.

At higher inclusion levels, he warns that it will be difficult to supply a diet balanced in types of energy, because cereals are quickly fermented, and more protein concentrate will be needed to balance the low protein content of cereals.