Forward buy feed to avoid potential price hikes

Dairy farmers should consider forward buying feed this summer to avoid potential price peaks.

The message to farmers has previously been to hold off from buying feed in advance in the hope that spot buying may offer cost savings.

See also latest feed markets

But Tony Bell, from BOCM Pauls, warned price volatility would continue and instead urged farmers not to leave it too late to buy stocks.

“The market now is much more nervous because of the weather, which seems to be becoming much more unpredictable and volatility will continue as the market assesses the forthcoming harvest,” Mr Bell told farmers at the North West Dairy Health and Welfare conference in Preston last week (26 Feb).

Talking specifically about the soya market, he looked back at last year’s soya bean meal prices, which offered delegates a glimpse into price peaks and troughs.

He explained if farmers had bought in January for September they would have saved £100/t.

The price of soya this year currently hinges on the outcome of the harvest in Brazil and Argentina.

“The harvest has started in Brazil and the first indication of yield is looking good, but there’s concern over the drought as the harvest progresses south.”

He added China’s “insatiable demand” for soya was also keeping prices firm – China has been buying and holding reserve stocks.

Mr Bell said US stocks of soya were “critically low” because it’s sold more than it can afford to export and there is pressure on China to sell stocks back to the USA.

As a result, the supply to the EU and UK remains tight and he said this was pushing up prices.

“Four or months ago the message was hold off from buying, but views will change as more information becomes available.

“As we are approaching summer, don’t leave it too long before buying.”