Delayed US plantings and Brexit concerns mean rising feed prices*

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For imported feed in particular, the announcement of Teresa May’s resignation adds another dimension to the Brexit situation with knock-on effects for the value of Sterling. The current exchange rate of around 1.26US$/£ (at the time of writing) is back down to the level seen at the end of last year, and not far off the lows of 1.22US$/£ seen in late 2016 immediately following the Brexit referendum.

To put this into perspective, the drop that followed the 2008 global financial crisis bottomed out at just below 1.4US$/£ (figure 1), with similar levels being the norm for the first half of last year. Compared to then, the current exchange rate adds around 11% to the cost of imported feeds like soyabean meal, which is equivalent to £30–35/t for the winter.

Figure 1 – US$ / GBP exchange rate since 1990 (source: (Click to enlarge)

Delayed planting pressure

Adding to this pressure is the poor weather affecting parts of North America. The latest report from the United States Department of Agriculture (USDA) showed that US corn plantings were just 58% complete compared to a five-year average for this time of the year of 90%. Soyabean plantings are even further behind, at 29% complete versus 66% average.

“…soyabean futures…above US$320/ton for the first time since September 2018.”

The result has been that Chicago Board of Trade (CBOT) soyabean futures have risen significantly, climbing to above US$320/ton for the first time since September 2018. It’s still too early to determine whether it’s a short or longer term trend as there’s still time to get the crops planted through June.

However, any additional delays will likely cause the markets to react further, despite good progress being made with the Argentine soyabean harvest (currently 91% complete) and demand from China remaining well below normal. Chinese soyabean imports had been climbing steadily year-on-year for more than a decade, but the impact of swine flu this year has been dramatic.

Pig numbers have been falling for the past eight months, and although accurate figures are hard to obtain, it’s clear that the epidemic has been widespread. Compared to this time last year, cumulative Chinese soyabean imports are down by 8 million tonnes (mt), to just 42mt.

Opportunities to buy

It means that prices could go either way. The key is to watch the markets closely and consider taking forward cover as and when any dips offer the opportunity. Soyabean meal prices still aren’t that far above recent historic lows, and there’s plenty of scope for prices to rise further if delays persist in North America.

For example, current winter contracts for soyabean meal are available at £335–345/t for November to April delivery, with the heat-treated rapeseed expeller NovaPro offering even better value (for a similar rumen-bypass protein supply) at £260–270/t. Produced out of Stratford from UK-produced rapemeal, this price is also unaffected by exchange rates.

For rumen degradable protein (RDP), the lack of alternative feeds following the closure of the Vivergo bioethanol plant and the switch by Ensus to maize (the oil content in maize distillers’ feed can suppress butterfats) continues to support rapeseed meal prices. The situation is being compounded by the reluctance of crushers to sell until the volume of new crop material is known.

This has created large premiums for the winter (around £10–15/t above summer prices), and few have been willing to buy at these prices. Yet with little alternative, much will depend on the current European rapeseed crop, which at present is predicted to be 17.9mt, around 2mt lower than last year.

Better value alternatives

Energy feed prices have also seen support on the back of the rising corn prices and weakening Sterling, with London wheat futures increasing £15-20/t in a week. Processed bread, biscuit meals like SweeStarch or SugaRich Dairy and Soda Wheat are still offering good value despite the rally, particularly for those looking to secure starch feeds for the winter.

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SodaWheat is a more rumen-friendly source of starch energy than rolled cereals.

However, it’s soya hulls that perhaps offer the best value at present, thanks to the good South American soyabean harvest last year. At £150-160/t for November to April delivery, it’s undoubtedly one of the cheapest feed ingredients available at the moment.

Any significant reduction in North American soyabean output estimates over the next month could see this change, so it’s definitely worth taking at least some cover now if it fits into your plans and budgets for the rest of the summer and next winter. Other options to consider for digestible fibre include Traffordgold wheat-gluten moist feed, brewers’ grains or draff in the north, all of which offer the added benefits of moisture and palatability to help boost intakes.

* 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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