Protein feed price dip opens a window to lock in cost savings*

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Length: 416 words; 2-3 minutes

soyabeans-in-hands

The combination of falling global soyabean prices and recent strengthening of Sterling has created an opportunity to lock in worthwhile cost savings on summer and winter proteins, highlights KW straights trading manager Claire Bradley.

“Although estimates for the near-complete Brazilian soyabean harvest have been cut to 116.5 million tonnes (mt), that’s still not far below recent highs,” she states. “The Argentine crop is progressing well under good conditions, and is on track to produce 54mt, substantially more than last year’s limited 38mt harvest.

“Chinese soyabean demand has also dropped for the first time in many years – how much is due to the swine fever epidemic is unclear – reducing overall global demand. As a result, US soyabean year-end stocks are set to reach around 24.5mt this year.”

Opportunity to buy

The impact on soyabean meal prices has been significant, with forward contracts consistently below £300/t for summer delivery, and dipping as low as £280/t at some points. However, according to Ms Bradley, some farmers are still reluctant to commit.

“Yes, prices could go lower, however it is difficult to say by how much. And the potential for prices to rise is considerable, whether due to Sterling weakening, adverse weather reports in Argentina or China increasing imports.

“…the opportunity to build cover now…is an essential part of managing that risk…”

“Taking the opportunity to build cover now that prices have dropped is an essential part of managing that risk, even if you leave some scope to take advantage of any further price reductions,” she continues. “Just make sure you’re being realistic about the overall average price you’re aiming for, because current prices are very close to recent historic lows.”

Best value options

The increasing soyabean crop has caused soya hulls prices to drop as well, down from around £190/t before Christmas to just £135-145/t for the summer. Rapeseed meal prices have also softened thanks to the resolution of strikes at one of Europe’s largest crush plants, with the supply of mid-proteins given a further boost by Ensus restarting bioethanol production.

Soya hulls image
Soya hulls provide digestible fibre energy to help buffer the rumen.

“However, Ensus will only be producing maize distillers’ feed, which isn’t as competitive against rapeseed meal as the wheat-based version,” states Ms Bradley. “Traditional rapeseed meal is also imported, so faces the same risks if Sterling weakens.

“In contrast, the rapeseed expeller coming out of Stratford is UK-grown and processed, has a higher oil and energy content, and is good value at £195-205/t for the summer. The rumen-protected version (NovaPro) is also worth considering as an alternative to soyabean meal, offering similar levels of rumen-bypass protein yet costing around 10-15% less per tonne.”

* 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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