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Straight Feeds

Straights Update

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Straights Market Report for 17 April 2012 (PDF, 218KB)

Straights Market Report from Mole Valley Farmers

APRIL 2012

Report 4 April 2012

General

On Friday the 30th March the United States Department of Agriculture published their Prospective Plantings Report for 2012 which proved very hard to digest! The market had been expecting Soya Bean plantings to rise from the previous months reported 75 Million acres to 75.9 M/a, and Maize to rise from 94 M/a to 94.7 M/a. The report actually increased Maize to 95.8 M/a, but reduced Soya Bean to 73.9 M/a. The expected Wheat acreage was also lower than expectations. In addition stock levels were also reduced Maize stocks were 2% below expectations, Wheat 2% lower, and Soya 1% lower. This all had an immediate and unwelcome effect on the market with prices for protein feeds finishing the week £12 to £16 up. Soya plantings are now set to be the lowest since 2007. This swing in prices was driven by fund buying and just further demonstrates the volatility of the market in today’s world.

Wheat

Over the month prices have risen by around £6. At the time of writing the UK ex farm price for Wheat is £167.50 compared to £161 last month, and the November futures price is £157 compared to £151.40 last month. On a positive note UK grain plantings are ahead of normal at this time of year because of the mild dry weather; spring Barley is 80% planted compared to the normal 50%. Also expected yields in the UK, Germany, and France are comparable to normal average yields, but regular rainfall is now required to achieve this yield potential. However yields in Spain and Portugal are forecast to be below average because of the dry weather. EU Wheat production is forecast to be 2% down on last year at 126.7 M/t. Russian Wheat production however is forecast to be the same as last year and exports are expected to be at the same level. We may also see downward pressure on prices coming from the increased Maize crops in the US (up 4%) and the Ukraine.

Soya

Straights Report April 2012 | 2012 Soybeans Planted The outlook for prices both short and longer term seems very bullish based on current reports. We have already seen prices rise by £25 in the last month and £75 since the lows of the market back in December. The reduction in plantings means that we could be heading for a very tight supply and demand. When the plantings were forecast at 75 M/a and using the trend line yield of 43.9 bushels the US carryover stock for 2012 was forecast to be 5.58 million tonnes. However at 73.9 M/a we need near perfect growing conditions over the summer to achieve the 43.9 projected record yield. If we do not get this, some commentators are predicting a negative carryover which could be explosive for prices. World demand would need to be rationed by increased prices. We must however remember that this latest report is still only a forecast of plantings and there is always a chance that US farmers may plant more Soya and less Maize. The cost ratio between the two, needs Soya to be 2.5 times the price of Maize to favour Soya, and currently it is 2.54 /1. This number may tempt farmers away from planting Maize and to planting Soya, but they are already busy planting Maize because of the early spring in the US and they have already planted 3% of the crop compared to the normal 2% by this time of year.

Many have also applied nitrogen with a view to planting Maize. The current surge in prices is also being fuelled by the situation in South America where the dry weather has resulted in further reductions in this years crop which is currently forecast at 66.5 M/t in Brazil (a reduction of 1.5 M/t) and 46 M/t in Argentina. The harvest in Brazil is currently 75% complete and 5.4% complete in Argentina, where yields are proving more variable. Some commentators are predicting a further reduction of 1.5 M/t which would push prices higher if this happens. On a more positive note, with the current very high raw material prices we are likely to see a reduction in demand, but there will still be a level of buying to fuel the market because it is estimated that compounders across the world have the lowest level of raw material cover in over 20 years.

Straights Report | April 2012 | Soya Meal Prices

The largest importer in Holland recently reported that they only have 20% cover. All of this bullish news seems to make it unlikely that prices will reduce during the summer. The only real hope for prices to fall is if we have perfect weather condition combined with reduced demand, increased Soya plantings and increased availability of South American Soya as the harvest draws to a close. This last point seems the most likely at the moment because the current high prices are encouraging South American farms to sell their produce. However if all or some of these factors come into play we are not likely to see significant falls in prices until the autumn for the winter period. There is one factor which could have a more immediate effect; we could see a return to macro economic news affecting the market.

There is a feeling that more negative news is imminent. Last year macro events saw the market collapse – “every cloud has a silver lining” – we will see!

Rape Meal

Prices have risen by £35 over the month and have very much followed the Soya market. Also we are experiencing supply problems because shippers are not keen to bring in large cargoes at current prices because demand always falls during May.

Sugar Beet

Since December, prices have only risen by £10 to £12 making Sugar Beet quite an attractive buy at the moment. Summer tonnage is very short but we still have a limited tonnage to offer, we also have a good price for the winter.

Soya Hulls

Over the last month prices have risen by around £12 which makes Hulls around £20 cheaper than Sugar Beet for the summer which is not bad but I think Citrus is a better buy. For the winter Hulls are practically the same price as Sugar Beet so they are not good value for money.

Citrus
Prices are around £16 cheaper than Sugar Beet for the summer which makes it a reasonable alternative, but there is no tonnage on offer for the winter at the moment

Crimped Maze
There are still supplies of Crimped Maize available for the summer period up to the end of August. Given the rise in grain prices and the current very dry weather, this product is a good source of bypass starch to compliment wheat in the diet with less risk of upsetting the cow’s rumen. The average analysis is 14.5ME, 70% starch and 65% dry matter. It is now also very competitively priced and represents good value for money.

Moist Feed
We now have clamping offers available on Brewers Grains but the price is quite high compared to past years. At the time of writing we do not yet have summer prices for our Moist Blends but we are booking up contracts on a “price to be agreed basis” to help customers secure tonnage. If the current drive weather continues supplies of all moist feeds could be short.

Molasses
Early grazing is always fraught with issues. Keeping some “winter” type ration in front of (particularly) milking cows is always advisable. However some of the problems include 1/ will they eat the mix. 2/ will the mix heat in the current weather conditions. 3/ does the mix contain everything required?

ED & F Man "Molasses” (i.e. a liquid feed with the balance of dry matter: sugar: protein: magnesium to your requirements) can provide solutions to each of these issues. Sugar will make the mix more appealing, and encourage higher intakes. Where heating ration mixes are an issue Fresh-Guard can be added to any “molasses” liquid feed. Investing an extra 2.2 pence per cow/day will help prevent this heating for several hours, saving a significantly greater amount. Don’t forget all ED & F Man molasses can have magnesium added, to help prevent staggers with any lush spring grazing. Also do not forget if you require protein, the regulated release high protein molasses blends are very cost effective compared to Soya and Rape. We also have summer contract prices available on all molasses products

Mineral Buckets
We have a special offer on our Cattle Tri Mag mineral buckets. This product represents the very latest in nutritional science and the offer is based on minimum 500kg orders. Please phone for details.

Straights Report April 2012