Farmers told to seek feed cover as prices ease

Livestock farmers are making the most of weaker grain and oilseed markets by covering their feed requirements for the next six months and beyond.

Feed buyers and traders have been advising farmers to start looking at their winter and spring needs now many have finished the second cut of silage.

Strong global crop estimates and positive reports from early harvests have eased prices since the spring but markets remain sensitive to any hint of bad news.

Some farmers are reportedly inquiring about buying two or even three years forward to take out some of the volatility.

Good predictions for the US soya bean crop have pulled the protein feed markets downwards.

See also: Farmers Weekly Prices & Trends

The US department of agriculture has reported 72% of the soya crop is good or excellent, up from 67% last year, while the total area is higher than in 2013 at 32.9m ha.

UK oilseed rape yields so far are better than average, though lower than early predictions, and last week rape was worth £220-230/t ex-farm for August.

The Paris rapeseed futures contract for November 2014 closed last week at €327.5/t (£259.18/t), almost €100/t (£80/t) less than three months ago.

Rape meal and soya meal prices have fallen about £70/t in the past three months, with rape meal for August and October available between £162-178/t and soya meal for £315-330/t.

Distillers’ pellets are available for £170-185/t and palm kernels at £134-140/t for the same period.

More downward pressure is coming from higher supplies from bioethanol plants such as Vivergo, which aims to be fully on stream by the end of the year. One trader said the company’s product, Provergo – bioethanol wheat distillers’ pellets – were the best buy on protein at the moment, at £176/t.

A lot of farmers had recently been moving back into better quality rations containing soya and distillers’ pellets as those become more affordable relative to rape, according to one buyer.

For cereals, UK wheat prices have lost about £40/t in the last quarter.

The latest USDA figures estimated this year’s world corn and wheat production above the five-year average at 981m tonnes and 705m tonnes respectively.

The UK November 14 wheat futures contract slid last week to £126.30/t but any significant news has led to rapid moves, like the shooting-down of the Malaysian Airlines flight over Ukraine.

Anglia Farmers feed and raw materials manager Phil Garnham said it was encouraging farmers to take advantage of the market lows.

“Seriously consider what you are going to do into the winter and maybe cover into next April,” he said.

KW Trident national dried/liquid feeds manager Chris Davidson said there was some expectation prices could consolidate a little after the recent sharp drops.

“As in any falling market, the best advice is to book portions of what’s required as the price comes down, leaving the opportunity to benefit from further reductions while incrementally reducing the risks associated with any rebound,” he said.

Mr Davidson said that alternative starch feeds, such as sweet starch and maize meal, had adjusted to stay competitive as the cereal price fell, giving more changes for farmers to make savings.

“Whether the energy feed market can fall even lower will depend on cereal harvest progress, the extent of any cereal quality issues and the impact of any action taken against Russia in response to the situation in Ukraine,” he said.