Linked In
News In
Linked In

You are viewing your 1 complimentary article.

Register now to receive full access.

Already registered?

Login | Join us now

EU compound feed output to fall at fastest rate in 7 years

Twitter Linkedin eCard

The European Union's $55bn compound feed market will contract at its fastest rate in seven years - even as weather upsets promise bumper supplies of downgraded wheat to offer livestock.

EU compound feed output will, after rising by 1.1% last year, reverse course in 2016 and record a 0.7% fall, according to Fefac, the Brussels-based compound feed industry group, terming itself "relatively pessimistic" over volumes.

The decline - the fastest since 2009 and implies a drop of some 1.1m tones in production – reflects in part forecast of a "slower pace" of expansion in output for poultry farms.

Growth in demand for poultry feed, the EU's biggest compound feed sector, is seen slowing to 0.5%, less than half the 1.2% increase recorded in 2015.

Pig contraction

However, Fefac also forecast a "significant reduction in pig feed demand", seen dropping 1.5% this year, "in line with expert forecasts on pigmeat production in the EU".

The US Department of Agriculture, whose data set world benchmarks, forecasts a 120,000-tonne drop to 23.23m tonnes in pork output this year from the EU, the second-ranked producer of the meat, after China.

USDA staff have flagged the knock-on effect of a fall in prices from multi-year highs in mid-2013, of some E1.10 per kilogramme for sows, to multi-year lows late last year of less than E0.70 per kilogramme.

The decline was fuelled by the knock-on effects of bigger-than-expected herd increases, led by Danish, German and Spanish producers.

Prices have, though staged a recovery this year, helped by strong exports to China, whose own pork output has been sapped by herd reductions, a hangover from a spell of low prices.

'Higher supply of feed wheat'

The drop in compound feed needs comes at a time when the EU is facing a poor quality harvest, thanks to persistent rains in many countries, and notably France, the bloc's top wheat producer.

"Concerns regarding the quality of the EU cereals harvest 2016 due to the humid and cold weather conditions in several EU member states may result in higher supply of feed wheat," Fefac said.

Separately on Tuesday, Paris-based analysis group Agritel said that "adverse weather conditions remain on a large part of the north of France, even if precipitations are of less intensity than a few weeks ago.

"Germany is experiencing rains as well in the south part of the country, a few days ahead of harvest."

Harvest-time rains represent a particular threat, in quality terms, with moisture encouraging kernels to sprout, reducing milling specifications, and potentially prompting crop downgrades to use only by feed mills, or ethanol manufacturers.

'Low feed costs'

Fefac's comments would appear, in seeing reduced compound feed demand for grain and strong supply, to imply a force for negative pressure on EU feed grain values in 2016.

That would represent a third year of depressed raw material prices for EU compound feed groups, with Fefac flagging that in 2015 "feed costs remained low, and even decreased compared to 2015.

"This was due to a good cereals harvest in the EU."

Overall compound feed production grew 0.6% last year to 157.3m tonnes, out of total EU feed volumes estimated at 480m tonnes, with grown in pig and poultry sectors more than offsetting a drop of 0.7% in cattle feed output.

The impact on cattle feed demand of the lifting of milk output quotas in April was "hardly visible" in the compound feed industry, Fefac said.

However, its data did show growth of 8.2% in cattle feed volumes in Ireland, and 6.0% in the Netherlands – two countries which have ramped up milk production since the quotas were ditched.

By Mike Verdin

Twitter Linkedin eCard
Related Stories

Evening markets: Soybean futures torn between Argentina, China fears

... with one concern upbeat for prices, and the other decidedly bearish. Cocoa, wheat end firm. But sugar comes close to a two-year low

Lean hog futures tumble - but it's not all China's fault

Beijing’s threat to impose a 25% tariff on imports of US pork is hardly bullish news for hogs. But it is not the only factor explaining tumbling prices

Chinese ag shares rise as Beijing threatens tariffs on $3bn in imports from US

... with the likes of US pork, fruit and ethanol in Beijing’s firing line. Still, not all shares in Chinese ag-related groups gain. Beingmate, WH Group tumble

Beef misses out on growth in meat stocks in US cold stores

Monthly US data show beef stocks falling by more than investors had expected. Still, rising protein inventories overall question bullish thinking
Home | About | RSS | Commodities | Companies | Markets | Legal disclaimer | Privacy policy | Contact

Our Brands: Comtell | Feedinfo | FGInsight

© 2017 and Agrimoney are trademarks of Agrimoney Ltd
Agrimoney is part of AgriBriefing Ltd
Agrimoney Ltd is registered in England & Wales. Registered number: 09239069