It looks like being another turbulent year for feed prices in 2012, with the global financial crisis still dominating agricultural commodity markets and the fundamentals of supply and demand playing only a secondary role.
Even strong demand and falling estimates of supply at the end of 2011 weren’t enough to prevent corn prices falling in the face of bad news about the global economy, explains KW feed specialist Chris Davidson.
“As the investment funds sold off their contracts looking to reduce risk, prices inevitably fell. And it wasn’t just corn that was affected.
“But the drop in the markets must be seen for what it was – more volatility, not a guarantee that prices will now remain low going forwards. There’s still the risk that if any really significant crop shortfalls begin to emerge, or confidence in the world economy begins to strengthen, we could see prices increase once again.”
Concern remains over the size of the United States soyabean and corn crops, and although South American plantings got off to a good start, there’s already talk of a La Nina weather pattern bringing dry weather. But countering this is a reduction in global demand, as the impact of the global downturn continues to bite.
“The good news for livestock farmers is that until the markets gain more confidence, any price increase is more likely to be a temporary spike, rather than a longer-term trend,” states Mr Davidson. “The best approach is still to maintain at least 50% cover at all times, securing forward contracts during the dips to avoid being caught out if the spot market peaks.”
The price of mid-protein feeds should also be kept under control by record oilseed rape plantings in Europe – although issues with low water levels in the Rhine affecting supply could produce some price spikes in the early part of the year. In addition, 2012 is expected to see the production of bio-ethanol in the north of England increase distillers’ feed availability, although some will simply replace volumes lost during recent consolidation within the brewing and distilling industries.
“Of more concern is the continuing high demand for moist feeds, which is already limiting availability, and forward buying to guarantee supply is likely to be more important than waiting for the very best price,” Mr Davidson adds. “One alternative is to make better use of liquid feeds to help gain some of the palatability benefits offered by moist feeds, with a range of options available to suit different protein and energy requirements.”
The potential to gain more from liquid feeds during 2012 is reiterated by KW nutritionist Richard Wynn, who’s urging livestock farmers to gear-up for new liquid feeds supplies. In addition to production from the Vivergo bio-ethanol plant in Hull, increased availability of pot ale syrup is also expected from a facility currently being built in Scotland.
“These new liquids will be great value, high in protein and ideal for feeding alongside low-protein feeds and forages, like maize silage. Just make sure you’ve got a big enough tank – or more than one – to get the best value by taking full 29t bulk loads, and to maintain a consistent supply.”
Further cost savings are available by switching to alternative protein strategies. According to Dr Wynn, KW customers have been saving the equivalent of £30-50/t by using bio-ethanol wheat distillers’ feed to replace some of the soyabean meal and wheat in dairy rations this last year.
“Greater use of high quality rumen-bypass proteins like heat-treated rapemeal and rumen-protected soyabean meal is also helping reduce feed costs, and is a trend we’re likely to see increase through 2012,” he states.
“The use of blends is also rising, with both compound users switching to a more cost-effective blend equivalent, and TMR mixers simplifying feeding and feed storage by using a ready-made blend to replace several individual straights.”
Dr Wynn is also keen to highlight the need to focus ever more closely on efficient feed use. Whether it’s improving ration mixing, increasing cow comfort or making better silage, all can have a huge impact on the performance achieved from every pound spent on feed.
“Make sure staff know what to feed and are focused on producing high quality, consistent and well-presented rations that maximise intakes and reduce waste. Provide plenty of clean, fresh drinking water, and ensure that building layout isn’t restricting access or space for feeding and cudding.
“None of these things are difficult to achieve, but they do require an attention to detail that’s too often missing,” Dr Wynn concludes. “As the biggest variable cost on most livestock farms, it makes good business sense to focus on getting the very best out of every feed fed this coming year.”