Plentiful supply will keep feed costs down

With high global stocks of both grains and oilseeds, there is little to suggest feed prices will rise.

Currency, weather, oil prices and other factors may make for bumps in the road, but not enough to change the downward price trend of feeds, said AHDB senior analyst Brenda Mullan at the levy board’s Outlook 2016 event this week.

The pressure on grains and other feed ingredient prices was one of the few positive aspects in the overall outlook for the beef, lamb and pigmeat sectors.

The main market influences include:

  • World wheat and coarse grain production has been higher than demand for three consecutive years.
  • Several years of record soya bean production, some of these at levels far above demand.
  • Currencies and crude oil values play a big role in the competitiveness of grains – sterling has weakened against the dollar for the past six months and against the euro since late 2015.
  • Pig and poultry use are driving feed demand – low pig prices could jeopardise growth if they result in a lower herd size.
  • In the UK, nine of the past 12 years have seen wheat production above domestic demand. For barley the number is even higher.
  • While successful exports are dealing with much of the UK barley surplus, the wheat-barley price gap has narrowed to about £7/t compared with £18/t during the 2015 harvest.
  • UK planting intentions show wheat steady, barley continuing to gain area and growers looking for alternative break crops.
  • Maize imports continue at high levels despite heavy supplies of home-grown wheat.
  • Pulse use in compound feeds has doubled in the past year, prompted by a rise in the pulse area forced by the three-crop rule,  part of CAP greening requirements. The pulse area is likely to rise by 15% this year.

Animal-compound-feed-graph

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