Consider feed cover for the summer as price volatility continues*

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Length: 407 words; 2–3 minutes

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The £10–15/t overnight price jump for soya hulls and soyabean meal seen last week was a clear reminder of the ongoing feed price volatility being experienced by UK livestock farmers, highlights KW’s James Butt-Evans.

“It’s the sort of move that can have a big impact on farm margins, and demonstrates the importance of forward contracts in helping manage that risk,” he states. “Unfortunately, the vast majority of summer requirements were left uncovered, despite prices being close to recent historic lows.”

The price jump came after Argentina’s Vicentin SAIC – a major crusher and shipper of soybean meal and oil – missed a $350 million payment to farmers as part of a debt restructuring plan to avoid bankruptcy. Interest rates in Argentina are currently above 60%!

“Brexit-induced changes in the value of Sterling are also capable of delivering a 10–20% shift in imported feed prices at very short notice, so the challenge is particularly acute for UK farmers,” Mr Butt-Evans continues.

”…an opportunity to contract at least some of what’s needed for the summer.”

“And any period of Sterling strength should be seen as an opportunity to contract at least some of what’s needed for the summer.”

In contrast, there’s positive news from Brazil, where the soyabean crop is over 80% planted and expected to receive beneficial rains in the coming weeks. This is helping limit any price rise, and with UK sugar beet feed supply likely to be tight this summer, booking at least some cover for soya hulls now could be a good move, states Mr Butt-Evans.

SugaRich Dairy feed
Confectionery blends like SugaRich Dairy supply more balanced energy than in cereals

“For other energy feeds, the value of some alternative feeds, such as the biscuit meal SugaRich Dairy, has definitely improved as wheat prices have firmed,” he states. “Both planting delays and a slowdown in farmer selling have added considerable pressure to local cereal prices, and there’s still a lot of uncertainty ahead.”

UK cereal exports remain broadly uncompetitive, so any increase in farmer selling in the New Year could see prices drop. But the prospect of potentially higher prices next summer if the planting delays significantly reduce wheat harvest volumes could also see old crop carried forward.

“The counter to this is that the AHDB’s current estimate for the barley crop puts it at 28% higher than this year. The key is to not hold out too long, and to consider a £5/t dip in energy feed prices as worth considering for the summer.

“The scope for prices to rise is still far greater than the potential for additional savings.”

* 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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