June 5, 2009

UK livestock farmers can expect feed prices to increase sharply after a shortage of soy in US.

UK farmers import around a fifth of their feed from the US, Argentina and Brazil, and soy is the principal component of those imports.

However, strong demand from China, drought in Latin America and flooding in the US have all put pressure on supplies and forced market prices up sharply.

Over the last two months, the price of soy on the Chicago commodity exchange has risen by 28 percent.

A spokesman from the Home Grown Cereals Authority (HGCA) said it was inevitable feed prices would also rise in UK.

He said the UK price of rapeseed had already risen from GBP250 to GBP275 per tonne since April, in response to higher soy prices.

US is the world's biggest soy exporter but after flooding and late planting, estimates are for a crop of 75 million bushels this year - well short of the US Department of Agriculture (USDA) April estimate of 165 million bushels.

Meanwhile in Argentina, with 90 percent of the harvest complete, production is estimated to be down by almost 40 percent on last year. The Brazilian harvest is also expected to be significantly down.

A spokesman at the Scottish feed company Harbro said the increased price of Latin American soy meal had already impacted heavily on prices.

He said soymeal price in Aberdeenshire has risen from around GBP280 to GBP340 per tonne over the last six months alone, double what it was two years ago, adding that pig and poultry farmers will bear the biggest cost as they normally add 25 percent soy to their standard feed mix.

US$1 = GBP1.611 (June 5)