26 January 1996

Feed costs look to be on the up

IN the first half of 1996 livestock producers can expect higher feed costs, says Chris Rackham, Associated British Nutritions director of raw materials.

World grain stocks will fall to 100mt this year, the lowest for 20 years, he said. And EU intervention stocks have fallen to 6m tonnes from 1993s 33m tonnes.

"In the short term, prices must move higher to force usage down," he said. "But given time, a free market has a tremendous capacity to re-balance itself. The higher prices would stimulate wall-to-wall production of feed grains.

"Good harvests around the world in 1996 could quickly improve world supply and demand, bringing lower prices leading into 1997. "But any serious crop problem in the next cereal year will cut stock to potentially critical levels, forcing feed prices still higher."

Feed markets in future will be characterised by far greater volatility, depending on the weather, suggested Mr Rackham.

Farmers should consider "fixing-in" prices until harvest. &#42