p>
RAW MATERIAL PRICES AND IMPLICATIONS
Since the last comprehensive report posted on this site in August 07 the raw material market has continued to rise, almost exponentially. The reasons for this are many, but all are here for some time to come.
The continued growth in the economies of countries such as China and India with massive populations to feed, with people themselves wanting more food, better food, and more food choices. When these extra demands globally are put in the context of little or no food stocks held anywhere in the world means that the sellers hold sway. It is also quite amazing that given these two facts most of the developed world’s governments are rushing headlong into producing food crops to process into Bio Fuels. It is now widely accepted that one major weather event, would rapidly lead to major food shortages throughout the world.
So whilst we will have fuel for our vehicles we will either be short of food, or must be prepared to pay much more for that food. Although a recent report from an all party committee of MPs points to the folly of this strategy, however this needs balancing by the current governments concern (or lack of it) for food security, being as it seems quite happy to see more and more food and food products imported into this country.
So as we can see some of the reasons for these massive rises are indeed global, however one other issue is causing great pressure and difficulty, and that is the EU and its stance on GM crops. This has meant the virtual disappearance of North American Maize Distillers and Maize Gluten from the market. Also has been the activities of city speculators who have latched on to rising prices and money making opportunities through the futures markets.
The raw material implications for compound feed therefore remain bleak and the following market price table gives a clear indication of that:-
|
Summer 06 |
Summer 07 |
Winter 07 |
Summer 08 |
Barley |
76 |
126 |
160 |
188 |
Wheat |
80 |
140 |
160 |
195 |
Hi Pro Soya |
140 |
160 |
229 |
245 |
Soya Hulls |
70 |
120 |
139 |
149 |
Maize |
120 |
160 |
195 |
215 |
Palm Kernel |
65 |
114 |
129 |
143 |
Rapeseed Meal |
80 |
120 |
148 |
175 |
Beet Pulp |
95 |
135 |
150 |
170 |
Urea |
160 |
190 |
250 |
280 |
Wheatfeed |
75 |
115 |
125 |
140 |
|
96.1 |
138 |
168.5 |
190 |
In the space of two years there has been a 97% increase in prices, and in the last twelve months a 38% increase. This will inevitably lead to a feed price rise this spring in the order £35-£40pt.
Not good news and not what farmers want to hear, however as food prices to the consumer do increase this must eventually benefit the primary producer, as has been seen recently in the dairy sector.
Howard Blackburn
Managing Director
22/01/08
For further information freephone 0800 027122 or contact us online.
