The feed price reductions of recent months have broken the trend of the last five years or so where markets have been very strong and every move was in an upward direction.

The Global Feed Market
The Global Feed Market

The record global maize crop has provided the break which livestock producers were looking for and has resulted in a ten percent reduction across the range of ration prices.

The downward trend in grain prices led by a mammoth US corn harvest coinciding with diminished demand for ethanol has now stalled however as spot prices have been supported by logistical issues in South America and the Black Sea. Wet weather in France has hampered harvest and delayed shipments with reports that 20 to 25% of the crop will be lost in some regions.

 

The Global Feed Market

The expectation that the big maize crop would exert a downward pressure on wheat prices has not really materialised and in spite of a big switch to maize and barley in livestock rations the strong demand for EU milling wheat has supported prices for the past few months. In the UK this has not been helped by the poor wheat harvest in England - the traditional source of wheat for Northern Ireland millers. In spite of good yields per acre the crop is reduced due to the large area which could not be planted in the wet autumn of 2012.

The ease in protein prices has not reached expected levels even with a record soya crop projected in South America and a reasonable crop in the US bolstering world stocks. The market expected the extra volume available in South America would have pressured prices in the second half of 2013 but record demand from China and a lack of farmer selling in Argentina due to political and economic instability have changed that outlook dramatically. As harvest is just getting under way in South America all eyes are on the weather - with hopes that the rain which caused such problems last year in terms of both harvest and transport of the crop to the ports will not spoil things again.

In North America the USDA are forecasting high exports of soya with year-end stocks extremely tight again this year - the hope would be that the current soybean/corn price ratio should mean higher plantings next year and stocks replenished in the longer term.

With the current state of the global feed commodity markets and the ongoing logistical challenges and shortages it is likely that local feed prices will not change significantly over the coming months. The outlook for the summer and further ahead is difficult to predict - the best hope of further reductions coming from the potential for wheat to be forced cheaper due to pressure from the other cereals and for soya prices to ease subject to a good harvest in South America.