Feedwatch: Securing winter feeds
Market dips maybe the best opportunity to secure winter feeds, as KW Feed’s Colin Shepherd reports
The last month has confirmed the highly volatile nature of the feed markets this winter, with soya bean meal prices dropping by around £18/t over a 2-3 week period, then rebounding by a similar amount just one week later.
Prices had already started to creep back before a USDA report announced higher than expected corn stocks, up by around 7m tonnes. News of this additional supply caused a reaction across all feed markets, resulting in soya bean meal losing £10-11/t in just a few days to end £18/t below previous highs.
But the following week the USDA reduced its yield estimates for both corn and soya bean crops, causing the markets to rapidly backtrack. It was a 4% reduction in corn yield estimates that sent markets rebounding, with future changes to current estimates likely to continue to create volatility in the market.
But so, too, is the strength of the feed markets, with the overall position for both energy and protein feeds this winter remaining one of tight supply and relatively strong global demand. It means that any good news on the supply side is likely to produce only a short-lived respite in prices.
This was further emphasised following the recently announced rise in China’s interest rates, causing concerns that demand for soya bean meal might be reduced as a result. Prices on the Chicago futures market initially dipped by around US$5/t, but within 12 hours were back within 10 cents of their previous position.
However, it is the corn market that is dominating price movements, and not just those for cereals and alternative energy feeds. The soya bean meal market is matching corn’s movements closely, with other protein feed following suit.
The reason for this is simple – as corn prices rise, so do expectations of increased corn plantings in North America at the expense of soya bean acreage. This raises doubts about future soya bean supply in an already tight market, causing soya bean (and soya bean meal) prices to rise also, to a point where it is once again an attractive option to growers.
But the global situation is only one part of the current story. Other key fundamentals for UK farmers include the renewed weakness of sterling against the US dollar, with previous market price lows coinciding with sterling’s rise to US$1.60/£, and current prices rising as the exchange rate falls towards the mid US$1.50s/£.
The good news is that prices appear to be trading close to the top of the market, with forward contracts for summer delivery also fairly unattractive in the mid £280s/t. It means there’s a far greater opportunity for prices to come down, than rise, so there’s currently little incentive to buy forwards more than a month.
What is clear, though, is that any further positive news on supply could create additional dips in the market that will provide useful opportunities to save maybe £5-15/t. Just be aware that any dip will probably be very short-lived, so quick reactions and a close working relationship with your feed supplier are crucial.
In contrast, wheat prices have eased slightly from previous highs, although there’s little real activity taking place and no clear trend emerging. Corn prices are at a point now where some international buyers will be considering a switch to wheat, and with sterling’s continued weakness this may keep prices high for the rest of the winter.
Much will depend on whether the Russian wheat export ban is extended, and any positive news on this front may also create an opportunity to buy. However, with many feeds also in short supply for the winter, the best option may now be to take a serious look at what alternatives might be available to fill any remaining feed “gap”.
Moist feeds were one of the better buys this winter, but are now – or soon will be – sold out. Some pressed pulp will still be available in November, while those in the north of England could consider KW’s new Northern Gold moist feed (a blend of distillery syrup and sugar beet feed).
Blends are also proving popular this winter, providing a range of options to suit most systems or help replace feeds no longer available. Among the dry straights, look for those offering best value, such as maize gluten.
The other good buy is molasses. The price of molasses-based liquid feeds is now at a point where it offers better value energy than cereals, with the added benefits of improved palatability, reduced ration sorting and increased intakes. The 44% crude protein Regumaize 44 is similarly priced to rapemeal, but with all the added liquid feed benefits and more energy.
• Prices correct at the time of writing, all prices quoted are for 29t tipped bulk loads delivered on-farm within 50 miles of origin. Prices subject to change.
For more information on moist feeds and protein feeds, visit www.fwi.co.uk/feedwatch