Record maize and soya harvests around the world, combined with a fast strengthening pound should lead to a significant reduction in compound feed costs over the coming months.
As a case in point Rabobank is already predicting that soya prices should be 6.0% lower than current market returns, come the fourth quarter of this year. Let’s hope this is the case. South America is awash with protein crops at the present time and soya bean planting levels in the United States for 2015 are predicted to be well up on previous years.
The truth is that livestock farmers in Northern Ireland have been hit by the double whammy of low farmgate returns and crippling input costs for the past eighteen months or so. Last autumn was to have seen ruminant feed costs come down considerably. This did not happen because soya prices strengthened on the back of increased Chinese demand and logistical problems concerning the actual shipment of materials from the Americas to that country.
It all added up to a pretty unsatisfactory state of affairs for dairy, cattle and sheep producers in this part of the world. This time around, however, Chinese demand for soya and other feed related commodities is pretty static – another Rabobank prediction. So, on this basis alone there is every expectation of feed prices coming down, sooner rather than later.
The real kicker in the equation is the strength of sterling. Our food exporters are now under real pressure due to the fact that the pound has strengthened so considerably against many of the world’s other currencies. The one upside to this is that imports – including feed commodities – should become correspondingly cheaper.
Traditionally, farmers are weak sellers and even weaker buyers: this is due to the fact that they are at the wrong ends of both the sales and procurement chains. However, from time to time, they actually need a break. And, in truth, they really need to see a reduction in feed costs coming their way over the coming months.