Protein prices continue downward trend, but risk of a rise remains*

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Length: 647 words; 3-4 minutes

As the promise of substantial soyabean crops in South America edges closer to being fulfilled, the downward pressure on protein prices continues. Yet despite this, recent reductions have been limited, primarily due to strong global demand for proteins and a lack of farmer selling in Brazil.

“There’s also still potential for adverse weather to delay the Argentinean soyabean harvest, as well as new crop plantings in the United States,” adds KW senior trader Chris Davidson. “So there’s still considerable risk of volatility, which for UK farmers includes the fluctuating value of Sterling.”

“…the savings may not be as great as farmers think they will be.”

In addition, Mr Davidson warns that the markets have already factored in much of the expected extra production, and that Chinese demand – if it continues to grow significantly – could quickly eat into that additional volume. So although further price reductions are possible if everything progresses as hoped, the savings may not be as great as farmers think they will be.

“Managing risk should therefore be a high priority, maintaining at least 1-2 months’ forward cover on proteins, booking a good portion of remaining summer requirements and some winter volume to help guard against any price increases.”

Potential weather impact

There also remains the potential for prices to rise, and quickly, despite the latest report from the International Grains Council (IGC) predicting global soyabean production will be 29.3million tonnes (mt) or 9.3% higher than last year at 345mt. The Argentinean soyabean harvest is progressing well, but is still only 49% complete (the Brazilian harvest is all but finished), and adverse weather during the coming weeks could result in prices rebounding strongly.

“Because of the general downward trend in soyabean prices since the start of the year, the investment funds have largely moved out of the market,” Mr Davidson continues. “But any hint that prices could rise due to harvest delays or quality concerns will see those funds buy back into the soyabean market in a big way.

“It means that a price rise would be driven much higher and much faster than the underlying factors alone would justify, potentially leaving those livestock farmers without forward cover exposed to the full extent of any increase.”

Better value alternatives

One option for the summer is to replace soyabean meal with the heat-treated rapemeal ProtoTec. According to Mr Davidson, recent reductions in new crop rapemeal prices mean that even now those sticking with soyabean meal are paying around 10% more than they need to for rumen-bypass protein.

“That equates to a substantial £30-40/t at current prices,” he states. “Soyabean meal prices themselves are highly unlikely to move that far, yet there’s considerable risk involved in waiting in the hope that they do. Switching to better value alternatives allows those savings to be locked in now.”

The start of new crop soyabean plantings in the United States has also brought a new period of uncertainty, though wet weather delays to wheat plantings may further increase the soyabean acreage and subsequent crop volume. At present, 14% of the crop has been sown compared to 21% this time last year.

“For other proteins, despite recent increases in rapemeal availability, Proflo British wheat distillers’ syrup continues to attract good levels of interest,” Mr Davidson continues.

“…compared to rapemeal, Proflo is worth considering on value alone…”

Proflo image
Proflo is a highly palatable, high energy mid-protein alternative to rapemeal.

“With a crude protein content of 40% and an extra 2MJ ME/kg DM compared to rapemeal, Proflo is worth considering on value alone, but with the added liquid feed benefits of increased palatability, higher intakes and reduced ration sorting.”

Energy feed trends

There are also better value alternatives to cereals available within the energy feed market. Good availability is keeping the price of wheatfeed highly competitive, for example, with summer contracts available at around £120-130/t for June to October delivery.

“We’ve also seen strong interest in the confectionery and biscuit blends like SweetStarch and Formula One, particularly from those farmers looking for a more balanced supply of energy to feed alongside grazed grass,” Mr Davidson adds.

* 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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