Feedwatch: Protein prices continue to rise

Worldwide pressures continue to cause feed prices to fluctuate. So which feeds should producers be buying forward and which holding back? KW Feeds’ Colin Shepherd reports

Pressures within the protein feed markets continue to grow, rather than ease, pushing prices in the UK even higher in recent weeks. The inevitable reduction in prices has yet to appear, so it’s still very much a waiting game for those looking to secure supplies for next winter.

Spot market activity remains the best option for immediate requirements, with very little other business being done. With prices for soyabean meal now hovering around £310/t, there’s even less activity than in previous months.

Continuing demand from China, plus little export activity from South America, are the big factors combining to put pressure on supply at present. In addition, the latest USDA report highlighted lower-than-expected soyabean plantings in the USA, with market rumblings that the Argentinean harvest may amount to closer to 35-37m tonnes, not the 39mt previously predicted.

Low protein stocks in China were expected to create short-term demand but, once those stocks were replenished, that demand was predicted to ease significantly. That’s just not happened, with continued strong buying from China now likely for perhaps another couple of months. The 6mt of old crop still held by Argentinean farmers awaiting a Government decision on export tariffs would also ease the situation considerably.

In the meantime, the high soyabean price continues to drive the price of other protein feeds, although rapemeal is currently an attractive option in comparison, and with good margins available to rapeseed crushers there’s also the potential for availability to increase. Against current prices, distillers’ pellets continue to remain competitive at around £160/t, with protected proteins such as SoyPass and Prototec (PDF) providing large savings as replacements for soyabean meal.

For example, just 1.2t of Prototec is needed to supply the same level of DUP as in 1t of hi-pro soyabean meal. With the former at around £200/t, that’s a saving of around £70/t by buying £240 worth of Prototec to replace £310 worth of soyabean meal. Even on a crude protein basis, the saving equates to around £35/t.

For energy feeds, the advice remains the same as in recent weeks – the market is at, or close to, the likely low point with increases expected as the summer progresses. So take at least 50% cover for the winter then top-up whenever the opportunity arises and further breaks in the market appear.

Recent strengthening of Sterling has made UK wheat exports less attractive, but some farmers are going to have to sell old crop soon to clear stores and generate cashflow. This is one of the factors pushing energy feed prices down at present, with soya hulls at less than £100/t ex-port and palm kernel and citrus still good value spot options.

But the expectation for late summer is still definitely for prices to rise as demand – including the requirements of the burgeoning biofuel industry – climbs and production estimates fall. Wet conditions are disrupting spring sowings in the USA, while concern is beginning to emergy over the impact of current drought conditions in the Ukraine and wider Black Sea region.

Currently, the best buy for next winter is perhaps wheatfeed pellets, the price of which has dropped dramatically. In addition to being an excellent source of digestible fibre energy, at current prices and with a protein content of 17%, it’s also worth reconsidering as part of an overall strategy to reduce protein costs.