Winter feed buying a top priority as market uncertainty increases*

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Length: 411 words; 2-3 minutes

Extreme price volatility and limited availability are the main themes currently affecting UK feed markets, with many popular feeds no longer available for summer delivery and selling out fast for the winter. According to KW straights trading manager Claire Bradley, taking good levels of cover now will be critical to both manage price risk and secure supply.

“There’s huge uncertainty affecting the feed markets at the moment,” she explains. “The trade war between the US and China may have caused soyabean protein prices to drop, but it’s against a backdrop of a global supply that’s extremely tight compared to demand.

“The North American soyabean crop had a great start, but with Argentinean output down approximately 18 million tonnes (mt), it needs to produce a bumper harvest. August is a critical period for pod filling, so any weather scares could send prices soaring.”

“Price rises are likely to be driven hard…any rebound could be extremely sharp.”

Price rebound risk

Price rises are likely to be driven hard by the investment funds, so any rebound could be extremely sharp. Any further falls will be limited by the tight supply situation, but the potential for increases is considerable, particularly given possible Brexit effects on Sterling’s value against the US dollar.

“The United States Department of Agriculture (USDA) may have increased year-end soyabean carry-out stock estimates by 10mt to 98mt due to reduced exports to China, but it’s not a reflection of any change in overall global demand,” she states. “The picture is also somewhat different for soyabean meal, with crush volumes in Argentina – a key source for UK imports – significantly lower than last year.”

European rapemeal supply is also down. Not only have some crushers switched to soyabeans due to better margins, oilseed rape supply for crushing is being limited by lack of farmer selling and the potential impact of dry weather on new crop volumes.

ProtoTec image
ProtoTec heat-treated rapemeal is a highly cost-effective source of rumen-bypass protein.

“As a result, rapemeal or October to April delivery is up around 20/t, though heat-treated rapemeal (ProtoTec) is still worth considering for rumen-bypass protein, at around the same 19p/100g DUP cost as soyabean meal,” Ms Bradley continues.

Digestible fibres tight

Tight supply is also affecting digestible fibre feeds, with the dry European weather expected to affect the sugar beet crop and subsequent supply of winter sugar beet feed. In addition, the reduced Argentinean soyabean crop has significantly cut soya hulls supply.

“For UK livestock farmers, Sterling’s weakness is adding to the problem, making imports more expensive and harder to secure. Combined with everything else that’s going on globally, it means that winter feed buying really must be a top priority.”

* 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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