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Further feed price declines expected but farmers may struggle to benefit

The industry’s continuing downturn means farmers may be unable to fully take advantage of feed deals

Joel   Durkin

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Joel   Durkin
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Feed prices could be set for further declines over the coming months but struggling livestock and dairy farmers may be unable to fully benefit.

 

The value of feed has fallen over the past year, with Hipro soya back about £64/tonne to £250-252/t in the year to March and high protein concentrates back about £17/t to £321/t-£329/t according to AHDB Dairy figures.

 

John Allen, consultant at Kite Consulting, said prices had not fallen as sharply as may have been expected in recent months and claimed there could be further price falls going forward.

 

"Going forward the market has got further weakness in it and it does not look like it is going to improve any time soon," he said.

 

"As lower raw materials feed through you can see feed [falling in price]."

 

But Mr Allen suggested some farmers would be buying feed on credit, claiming this would stop them from gaining the best deals.

 

Volatility in farm returns

 

Dairy prices have fallen substantially over the past year and livestock farmers have also seen significant volatility in farm returns over recent months, hitting farm confidence.

 

"Those with poor [dairy] contracts, including people on A and B contracts, will struggle to find the economic incentive to go and chase the extra milk. I think the whole milk price-feed price incentive varies dramatically," he said.

 

It was a theme underlined by Phil Stocker, chief executive at the National Sheep Association (NSA), who claimed cash was tight among sheep farmers, particularly in upland regions.

 

"There is a real shortage of cash [in the uplands]. I do not think there is a lot of cash splashing about and I think people will be looking for good deals," he said.

 

But Mr Stocker suggested those who were tight on funds may wish to look at slightly better quality feed than the cheapest, which would allow them to feed their animals more sparingly.

 

Focus on nearby

 

ForFarmers recent analysis of the straights market suggested those buying soya requirements should focus mainly on nearby months.

 

"We suggest the main focus has to be on the nearby months as it looks as if we may see values firm in this technical market," a ForFarmers spokesman said.

 

"Looking further forward we still see downside potential on the Chicago market assuming the weather behaves as expected, although it may be worth increasing cover slightly during any dips in the market."

 

The firm said farmers looking at energy requirements may wish to look at bread and biscuit meals, which it claimed represented good value for money.


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