The demand for compound feed in Britain is expected to rise in the 2024-2025 season, driven primarily by increased cattle and sheep feed production.
This is according to new research by AHDB, which states that cattle feed production has surged by 112,000 tonnes year-on-year, while sheep feed demand has grown by 19%.
This increase is partly due to stabilising agricultural input costs, such as lower feed and energy prices, which have improved margins in the dairy sector.
However, concerns like bird flu and a declining breeding pig herd continue to depress demand in the poultry and pig sectors, according to the report.
Raw material usage for feed is also shifting: the proportion of cereals, particularly maize, has increased due to favourable pricing, though this may decline later in the season as maize prices rise.
Meanwhile, oilseed rape meal usage has decreased by 5%, mainly due to limited oilseed supply, the levy organisation notes.
The overall feed grain market faces a global grain deficit for 2024-2025, driven by reduced maize production and slower Black Sea exports.
As a result, AHDB forecasts in its report, released today (7 March), that feed grain prices will rise in the medium term.
On the other hand, oilseed prices, particularly for rapeseed, remain high due to tight supply, but long-term outlooks are less bullish with abundant soybean supplies from Brazil and potential US tariff impacts.
Jess Corsair, AHDB senior economist said: “While cereal inclusion in feed rations will likely remain steady, the global grain market’s bullish trends could increase feed prices.
"However, the bearish outlook for oilseeds and the potential for higher soybean supplies may limit price increases in the longer term.”
The outlook for nitrogen fertiliser prices indicates a stabilisation in input markets, expected to continue over the next year, according to the research.
Fertiliser prices, which saw significant hikes due to the energy crisis in Europe and changes in domestic supply, have settled down in 2024 compared to the highs of 2022 and 2023. However, prices remain above pre-inflationary levels.
In Great Britain, the demand for nitrogen fertilisers increased by 4% year-on-year in 2023, driven by reduced prices.
Field-level nitrogen usage per hectare rose slightly, AHDB says, mainly due to increased straight nitrogen applications, while compound nitrogen application rates remained stable.
The use of urea and urea ammonium nitrate (UAN) increased, whereas ammonium nitrate (AN) and calcium ammonium nitrate (CAN) usage declined.
GB fertiliser prices remained stable throughout 2024, with AN fertiliser averaging around £336/tonne, a significant drop from previous years, the report notes.
Despite the stability, the lack of freely available information on fertiliser markets poses a risk to food system resilience.
Future uncertainties include instability in the Red Sea region, supply chain issues for natural gas, and potential impacts from the war in Ukraine. Fertiliser prices are influenced by global crop prices and energy costs.
AHDB notes the the UK government is consulting on a Carbon Border Adjustment Mechanism (CBAM) to be implemented in 2027, which could increase fertiliser costs.
Meanwhile, the straw market faces continued challenges with tight supply, price volatility, and uncertain conditions for 2025, the levy group's report adds.
Reduced cropping areas and weather variability have strained the market, leading to higher straw prices.
Wheat and barley straw prices, which typically track each other, saw fluctuations in 2024, with barley straw commanding a premium due to its limited supply and higher quality.
Winter cropping is set to decline in 2025, while spring-sown crops are vulnerable to weather, particularly dry conditions, which may cause variable straw yields.
While some relief may come from the 2024 forage harvest, the ongoing tight supply and higher contracting costs, such as for baling and wrapping, contribute to rising prices, AHDB says.
Despite some stabilisation in input costs, like fuel and fertiliser, contractor pricing has continued to rise, which supports the current price levels.
The report concludes that the market remains uncertain, and unless an exceptional baling season occurs, straw prices are unlikely to return to previous lower levels.
Ms Corsair said: “Farmers will need to carefully manage their production and costs as they adapt to these conditions, with a new price level and supply constraints expected in the coming years.
"Weather will remain a critical factor influencing market trends.”
