Rising global feed production but feed value still top priority*

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Length: 797 words; 4-5 minutes

Wheat image

Although global cereal production is rising and likely to exceed worldwide demand this year, recent highs for UK wheat futures prices – peaking at £140-145/t for November 2017 delivery – and even stronger spot pricing reflect a position of tightening domestic supply.

The main causes are strong demand for competitively priced UK exports, which could continue if new crop grain is of high enough quality, plus a reported 5% drop in UK wheat plantings this year.

“…not switching…equates to paying £11-19/t more than necessary for wheat!”

It’s putting the focus squarely on the better value starch feeds, with confectionery and biscuit blends like SweetStarch and Formula One popular choices for the summer. At similar cost per tonne delivered ready to feed, not switching to one of these higher energy options (12.7-13.5MJ ME/kg freshweight vs 11.9MJ ME/kg FW for rolled wheat) currently equates to paying £11-19/t more than necessary for wheat!

Good growing conditions

Globally, the picture is mainly one of good growing conditions in key wheat producing regions and increasing crop volumes. Latest United States Department of Agriculture (USDA) estimates have increased world wheat production by another 2.8 million tonnes (mt) to 249.9mt compared to 240.3mt last year, with the small dip in predicted Europe production more than compensated for by increases for Argentina (+1mt) and Australia (+2mt).

The predicted wheat area in Argentina remains at 4.9 million hectares (m ha), but it’s 24% higher than last year and yield estimates continue to rise (currently 3.27t/ha). In Australia, unusually good growing conditions all season look set to produce a 35mt crop – a massive 45% greater than last year from a similar area (12.9m ha) thanks to yields expected to hit a record 2.71t/ha.

Rising production estimates

For northern hemisphere crops, some of the concerns around dry conditions in US wheat growing regions have been eased by forecasts of rain, and winter crops across Ukraine are reported to have survived the cold weather well and be at a more advanced growth stage than normal. In addition, much of Europe has also benefited from good weather, with the French wheat crop currently at 92% ‘good-to-excellent’, for example.

The outlook for maize is also good, though the weather remains critical for the second Brazilian crop as pollination begins. US corn plantings are continuing nicely in southern regions, although possible delays are expected in more northern areas due to further rains.

Overall, however, USDA estimates for global maize production through 2016-17 have been raised again, this time by 9mt to 1,094mt, due in large part to Brazilian output now expected to be 5mt higher than previously thought thanks to record first crop yields (+29% compared to last year) and timely planting of the second crop. European plantings are expected to be down to 8.7m ha, but the likely 0.9mt reduction in output is more than offset by other regions.

Protein price pressure

In terms of proteins, progress with the South American soyabean harvest continues, with the Brazilian crop 74% complete at the time of writing (almost complete in the northern states) and Argentinean harvest beginning to get going in the earliest regions. The outlook for yields continues to be good, with 60% of the Argentinean crop undergoing pod fill at the time of writing and good rainfall forecast. The latest estimate from AgRural has raised previous Brazilian harvest estimates by 3mt to 111mt.

“UK soyabean meal has fallen more than £30/t since the beginning of March…”

As the positive news continues to outweigh the negative, pressure on the price of soyabean meal and other proteins is building. UK soyabean meal has fallen more than £30/t since the beginning of March, with forward contracts for April to October delivery now around £300-310/t.

New crop rapemeal is typically competitive for the time of year at £180-190/t delivered between August and October, despite the European spring growing season only just beginning. In Canada, delays in snow melting away may delay canola plantings, but any potential impact is as yet unknown.

Better value alternatives

Proflo image
Proflo is a highly palatable, high energy mid-protein alternative to rapemeal.

For UK feed buyers, reduced availability is limiting mid-protein feed choices until new crop rapemeal is harvested, though British wheat distillers’ feed and the high protein liquid feeds like Proflo are still readily available and attracting good levels of interest as a result. With a crude protein content of 40% and an extra 2MJ ME/kg DM compared to rapemeal, Proflo is worth considering on value alone, but also provides the usual liquid feed benefits of increased palatability, higher intakes and reduced ration sorting.

For rumen-bypass protein, the drop in the price of summer rapemeal has improved the value of heat-treated rapemeal supplements like ProtoTec. Anyone buying soyabean meal to supply digestible undegraded protein (DUP) this summer is going to be paying 14-16% more than they need to, which equates to a substantial £40-50/t.

As is so often the case, careful feed choice continues to outweigh the potential gains – and risks – of trying to play the feed markets.

* Prices correct at the time of writing and subject to change. Unless otherwise stated, all prices quoted are for 29t tipped bulk loads delivered on-farm within 50 miles of origin.

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