World meat industry news

All news / Feed production growth did not cancel the growth of the price

  • 28 Feb 2019, 11:41

At the end of December last year, the livestock breeders were provided with animal feed, although grain stocks  by the end of the year had decreased slightly year-on-year. The grain harvest, though yielding to the figures of 2017, was still high, although active exports reduced grain stocks by almost 24%. This is somewhat reflected in the availability of feed: the figure for the year fell by 4.3%. At the same time, feed production, against the background of high yield, showed a positive trend: the total volume of mixed fodder production in Russia in December 2018 was 2.5 million tons, so by the beginning of 2019, we can expect an increase in feed stocks. Despite the low production rates at the end of autumn due to bad weather, which affected harvesting, the high rates of the beginning of the new agricultural year contributed to the fact that the overall rate of compound feed production by the end of December increased by 65 thousand tons and reached its maximum for 2018. 

At the same time, a significant increase in feed prices, which was observed in December last year, was caused by a rise in export supplies of grain and low grain stocks. So, in the first half of the agricultural year (July - December 2018), Russia exported 28.8 million tons of grain crops to foreign countries. Moreover, the Ministry of Agriculture raised the forecast for grain exports to 42 million tons, which spurred export prices for Russian grain by the end of the year, which provoked a rise in feed prices. By the end of December, the average production price for feed was 16.6 rubles / kg, only since the beginning of the year the price tag has grown by more than 20%. The rate of December 2018 is 16.3% higher than the same figure recorded a year earlier. The average for the 4th quarter of 2018 is 2.6% higher than the level of 2017, which was due to an increase in the cost of compound feed from September to December, and especially in November due to the reduction in production (-2.3%).

The rollback of export grain prices has already affected the domestic market, and this will have an impact on the cost of feed, which should also react with a downward trend. Nevertheless, one should not expect a strong decline (the probable fluctuation will be no more than 1%), because the seasonal decline in production and stocks will affect the market.

Source: Meatinfo