Feed Watch: Protein prices dominate buying decisions

Continuing tightness of supply versus demand, particularly within the proteins market, still dominates feed-buying strategies.

If you add in the potential impact on energy feed prices of continuing problems with imports of maize gluten and distillers’ feeds from the USA, along with lower cereal plantings throughout much of Europe, there really is a need to formulate plans to secure required feed supplies sooner rather than later.

The energy feeds available remain good value, and prices are more likely to rise than fall in the coming months. This is despite the latest USDA report suggests a total world wheat production for 2009 of about 650m-660m tonnes. This is about 25m tonnes down on last year’s record highs, but still 60m tonnes higher than the lows of 2007-08. Forward contracts for November delivery of wheat are still about £10/t higher than the spot price.

With some dry weather being experienced in the key growing areas of Europe, the USA and Australia, the advice is still to secure at least 25% of all winter energy requirements as a matter of priority. Excellent availability and a competitive price make wheat feed a top buy at present, with contracts right through to April 2010 worth securing now.

It’s also worth thinking outside the box. Do you really need maize gluten, or can it be replaced with Scottish distillers’ pellets, or perhaps wheat feed supplemented with another protein to achieve the same result? Alternative strategies are available for those open-minded enough to see the potential benefits.

Implementing strategies will be necessary for many to minimise exposure to high prices now or in the future. Securing part of the winter’s energy feed requirements on forward contracts now is typical of this, not only to avoid the worst of any potential price rises, but also to guarantee supply. But for protein feeds a different approach is needed, as soyabean meal prices are still too high to consider locking in too much with forward contracts.

At present there appears to be no end in sight for the imbalance between supply and demand that is keeping prices high. Chinese demand is still high, and has remained so for longer than expected. Recent rumours of China selling on a shipload of soyabean meal – suggesting domestic demand may be slowing – have not been confirmed and the markets haven’t fallen in response.

More solid news comes from the latest USDA supply-and-demand review, confirming the Argentinean soyabean crop at 34m tonnes, compared with 46.2m tonnes last year. To add to the bad news on the supply side, US plantings at the time of writing were reported to be just 25% complete, compared with 44% at the same time last year.

Minimising soyabean requirements has be a priority for those willing to look at alternatives. The main strategies to consider are the use of heat-treated rapemeal (eg, ProtoTec) or rumen-protected soyabean meal (eg, SoyPass), with high-protein molasses (eg, Regumaize 44) to supply extra rumen degradable protein as required or even a high-protein custom.

All will cut costs. For example, a typical 50:50 soyabean meal:rapemeal blend could be replaced by ProtoTec with extra energy, perhaps from soyahulls. An 85% ProtoTec, 15% soyahulls mix for instance could save £30/t.