Farmers stay cautious despite falling feed prices

Feed prices appear set to keep sliding, though farmers hurt by poor farmgate returns remain reluctant to buy.

Protein values have slumped since the US Department of Agriculture’s surprise jump in soya bean yield predictions a fortnight ago.

Chicago prices have returned to the six-year lows last seen in May as soya beans fell 16% and meal dropped 12%.

In the UK, high-protein soya meal is being sold on to farm between £265-280/t through into summer 2016. Last year prices were in the £320-330/t range.

Some traders have warned the USA may have overestimated the soya crop.

But sharp falls on world stock markets early this week have highlighted weaknesses in demand, especially in China, which would keep prices under pressure.

“Soya might be at its lowest level since 2009 which is going to have a very positive impact for everybody involved in the feed industry”
Phil Garnham, Anglia Farmers

Anglia Farmers feed and raw material manager Phil Garnham said farmers with tight cashflows had been pushed into buying spot, which had worked well in a falling market.

“People have been doing it very much on a month-to-month basis and they say it has worked well for them,” he said.

“Soya might be at its lowest level since 2009 which is going to have a very positive impact for everybody involved in the feed industry.”

Cereals are following a similar trend. Ex-farm spot feed wheat prices dropped slightly to range from £99-110/t last week, though the November 2015 UK futures contract crept up to £115 on Monday (24 August).

But merchants warned that some feed products could see supply problems over the autumn and winter if farmers kept buying hand to mouth.

Rape meal is trading at about 65% of the value of soya bean meal, making it expensive delivered on-farm in the £190-200/t area. A rush for other products like wheat distillers might pull up prices.

The same could happen if there is a surge in demand for starches such as wheat feed pellets in the autumn.

KW Alternative Feeds national dried/liquid feeds manager Chris Davidson said farmers should look at relative feed values, not just buying what they had always done.

“On proteins, the price should follow soya but if you get to a point when there is not much material you could well find there is a problem,” he said.

“Do not keep doing what you always do. You have got to get best value in what you need.”