Both cattle and pig feed prices are declining quite rapidly. Further price reductions are also on the horizon. Market fundamentals are currently extremely favorable for livestock farmers, which is a welcome development, given that yield prices are actually below par.
The wheat price on the Matif fell below the psychological threshold of €200 per tonne in July, and it doesn't look like it will rise significantly above that level anytime soon. We're in the middle of the harvest season, and Europe is enjoying a bumper grain harvest. Russia and the United States are also threshing relatively large volumes compared to previous years. The International Grain Council even predicted a record-high grain harvest last month. However, ending stocks are declining slightly as consumption increases.
No counter-sanctions on soy
The global supply of soybeans and soybean meal is also high due to ample acreage and favorable growing conditions in the Midwest. Moreover, the trade deal between the US and the EU has averted a potential retaliatory measure on American soybeans. The price of soybeans in Chicago has fallen sharply in recent weeks, dropping to its lowest level since April of last year. The physical price of wheat briefly hovered above €200, but is also declining. Barley has already fallen below that level. In addition to falling prices, European feed producers have recently benefited from the strong euro for the supply of overseas volumes.
Chunk prices are falling faster
The combination of falling raw material prices and a favorable currency market is clearly affecting feed prices. Figures from Wageningen Economic Research show that the price of pig feed fell by €6 in July to €293 per tonne. This is the largest drop in a year and a half. Sow feed lacto and piglet feed also became significantly cheaper, as did transition feed. The price of grade A feed fell by €4 to €302 per tonne. High-protein feed (grade B) also became cheaper.
Favorable expectations
De compound feed price indicator predicts further price declines of up to 10% compared to current levels in the coming months. Whether this favorable forecast will fully materialize, of course, remains to be seen. Many price-depressing factors have already been priced into the commodity market. Moreover, the euro weakened somewhat this week after the trade deal was concluded. Nevertheless, there still appears to be room for a further decline in feed prices. Given the depreciation of pig and piglet prices, this is a welcome development, especially now that the milk price is also under slight pressure.