Feedwatch: Soyabean shortage sends prices sky-high

With the soyabean meal market still heavily influenced by fund buyers, the only real changes in UK prices have come from minor currency fluctuations.

So the advice remains the same as it did at the end of last month – buy spot if you have to, book now for January deliveries at a £10/t discount, and look to take perhaps 50% cover for February through to April to hedge against prices remaining high.

At the time of writing, prices were back above £300/t delivered on-farm, and supplies remain tight. Compared to a “normal” year, there has been little soyabean meal sold on forward contracts this winter, so there are an awful lot of customers still to buy.

It means those few ships that are coming in are quickly sold out, and there still appears to be little chance of supply outstripping demand in the UK any time soon.

What will change is at some point the fund buyers will see the market peak, and then rush to divest their interests in soyabean meal futures as quickly as they can. We just don’t know when this will happen.

When it does, be prepared to book forward strongly, as any subsequent rush in demand could cause an even greater tightening of supplies, and prevent prices falling as far as we’d like.

Minimising soyabean requirements using combinations of rapemeal, distillers’ feeds, ProtoTec (heat-treated rapemeal) and SoyPass (rumen-bypass soyabean meal) is still the best strategy, saving £50-80/t in most cases. The only challenge is the lack of supply of rapemeal and distillers’ feeds, though this situation is likely to ease from February onwards.

So far this winter, considerable volumes of wheat distillers’ feeds from mainland Europe have diverted to Ireland to meet demand, while the reduction in Scotch whisky distilling is reducing availability at home. It won’t be until the new bio-ethanol plants in northern England begin production towards the end of winter that supply of wheat distillers’ feeds will improve.

Likewise, little rapemeal is available at present, with large volumes sold forward earlier in the season. If you need material for December or January, the advice would be to probably book now to ensure supply, rather than worrying about price, though by February crush volumes should be increasing and availability improved.

The energy feed markets remain in a similar position to last month. Very little business is being done on cereals, with a large proportion of growers apparently happy to wait for prices to improve. The actual volume of wheat being held back is an unknown, but with steady export activity on the back of Sterling’s continued weakness against the Euro, prices may yet pick up again towards the summer.

There’s also a lot of confidence in the current crops. Weather conditions have generally been good, and not just in the UK. The result could be some large carry-over stocks come July, and the potential for a large harvest in 2010.

But other high-starch feeds are in very short supply, so cereals remain a good option for this winter, particularly if treated with caustic soda (SodaWheat) to help counteract the acidic silages on-farm. The current $20/t discount for barley is producing a reasonable sales volume ex-farm in the face of few alternatives.

The digestible fibre energy feeds, however, are available, which is perhaps a surprise given the need to buffer the aforementioned acidic silages. Sugar beet feed, soya hulls and pressed pulp – the only moist feed currently available in any volume – are all good value this winter, though since the millers slowed production ready for shut-down over Christmas, wheatfeed meal prices increased rapidly as supply dried up.