Feed markets moving, but no clear overall trends…yet!*

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With many different factors currently affecting UK feed markets, risk management and careful use of forward contracts are likely to be a high priority, explains KW trader James Butt-Evans.

The US:China Phase One trade deal may have been signed, but there’s still considerable uncertainty affecting feed markets as analysts wait to see how much of an impact the deal has. And with a stronger Sterling improving imported feed prices, but difficult planting conditions adding pressure to UK cereal values, there are few clear trends emerging.

Globally, cereal prices are being supported by smaller estimated volumes for the 2020-21 season, plus significant logistical problems in France, the EU’s biggest wheat supplier. Renewed rail and port strikes have reportedly resulted in 450,000t of grain blocked at French ports, worth some €100 million.

Upward price pressure

The result has been a significant lift in nearby prices, with added pressure from reduced farmer selling here in the UK. The prospect of smaller crops due to winter planting difficulties is causing growers to hold onto crops in anticipation of even higher prices going forward.

Barley and maize are proving better value than wheat for many, though with UK barley reported to have secured a 25,000t export contract recently, prices have recently received a little support. A potentially large spring barley crop (as unplanted winter wheat area switches across) is likely to limit any potential rise long term.

“…which has created good opportunities for the co-product energy feeds…”

Much of the upward price pressure has come onto nearby prices, which has created good opportunities for the co-product energy feeds, which are priced according to futures values (which have been less affected). The confectionery blends like SweetStarch and SugaRich Dairy at £165-170/t for Mar-Apr delivery are definitely worth a look.

Good fibre opportunity

For digestible fibre energy, current prices for May-Oct delivery of soya hulls is comparing well against sugar beet feed. Prices have moved up a little recently, but at £160-170/t are still worth considering for the summer.

It’s unclear how long these prices will remain, however, as there are significant pressures within the soyabean processing sector. The Vincentin crush plants in Argentina remain idle, and the lack of production is already been felt in the soyabean meal market with nearby prices remaining firm.
A lack of farmer selling as they hold onto soyabeans to guard against the risk of inflation is adding to the pressure. Nearby premiums are expected to remain until June.

Fortunately, the UK position has been helped by recent improvements in the value of Sterling, and at £310-315/t for Mar-Apr contracts the price is still not far off recent historic lows. Summer prices are faring better, closer to £305-310/t.

Soyabean harvest underway

The Brazilian soyabean harvest is reported to be underway, but at a pace that’s below the five-year average. Recent rains in northern areas have slowed initial harvest progress for early-sown crops, but has the potential to boost yields in those sown later.

Good early harvest reports from the major Mato Grosso region have led some analysts to increase total crop forecasts to a new Brazilian record of around 120-130 million tonnes (mt). Dry weather in the Rarana state is the only potential concern at this stage, and is unlikely to have a significant impact if the only issue. Current weather forecasts in Argentina are not affecting crop estimates.

However, much will depend on how much the Phase One trade deal between the US and China affects global soyabean demand. Consumption in China remains severely reduced as a result of the ongoing Asian Swine Flu (ASF) outbreak, and there is little clarity around how the impact on soyabean imports will play out.

As has been the case for some time now, there is considerably more scope for protein feed prices to rise than fall, and risk management will be a key factor in many buying decisions made over the coming months. Forward contracts for rapeseed meal are reflecting the expectation of a bumper new crop here in the UK, with a discount of around £5-10/t over nearby prices.

Better protein value

UK-produced NovaPro is a highly cost-effective source or rumen-bypass protein.

For rumen-bypass protein, the xylig-treated rapeseed expeller NovaPro from Stratford remains substantially better value than hi-pro soyabean meal, offering similar levels of DUP (digestible undegraded protein) for around 17-20% less per tonne. That’s a significant saving.

University of Nottingham research also shows that the switch to a rapeseed-based source of rumen-bypass protein can lift daily yields by 1.7 litres/cow. One of the main reasons is the better amino acid profile for milk production in rapeseed than in soyabeans.

* 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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