Although further weakening of sterling in the aftermath of the EU referendum has helped make exports of NI agricultural products more competitive, feed prices look set to increase due to imports of straights becoming more expensive.

Sources in the animal feed industry in NI suggest that at least a 10% rise in prices is likely in the coming months, with compounders currently buying straights for late summer and into the autumn.

The expected increase could be greater given further exchange rate movements this week which have seen sterling fall to a 31-year low against the US dollar at £1 = $1.30 and against the euro, fall to €1.17, making €1 worth 85p.

In the animal feed trade, grains are generally traded in euro and protein sources in US dollars. Although compounders buy straights in forward contracts, the likelihood is that more expensive imports will soon start to filter through, especially if sterling continues its downward trend.

Demand

“Feed mills have already been cautious in committing to purchases this year as demand is down from farmers, particularly in the dairy sector. This means that many will move into the market shortly if they are not already in it,” one source told the Irish Farmers Journal.

Most recent figures from DAERA back this up showing that total tonnage of feed delivered to NI farms in the first four months of the year is at a four-year low, back 3.7% on 2015 levels to 812,000t.

Away from Brexit and exchange rates, another factor is global price rises of soya meal since April. This is primarily down to the weather conditions in South America leading to a poor harvest, which saw spot prices rise by up to £100/t at its peak.

However, it seems that there is no immediate shortage of soya meal globally, although reduced yields in South America, coupled with speculative buying by traders, was enough to change market sentiment quickly.

With harvest beginning in southern states in the US, the outlook there is fairly good with most suggesting that short-term weather conditions are the main factor.

This, together with data released last week showing greater than expected acres of maize and wheat planted in the US, has resulted in maize prices in US dollars fall with the wheat market remaining steady.