Time to consider forward purchase of winter feed
Published 09/07/2014 | 02:30
As in previous years I am advising clients that now is the time to look at winter feed budgets. An immediate task is to look at the option of forward purchasing.
While this practice carries some risks due to fluctuating commodity prices, in most cases it can deliver significantly lower winter feed costs while also helping cash flow during the winter feeding season.
The forward buying process is simple. When the quantities of the feed required are determined and price is agreed, a contract is issued to the purchaser – in this case you.
This should outline the amount of product to be delivered, the delivery dates, price and specification of the product. In most instances, the price agreed will be on an ex-port basis, so you need to factor in transport costs. These can vary greatly depending on load size, distance travelled and method of delivery (tipped or blown).
As with any global commodity, livestock feed prices are influenced by supply and demand.
Forward markets trade on expectation of harvest yield, and with successful plantings and positive weather forecasts, prices are quite low. As a buyer you are always trying to buy at the bottom of the market.
However, it is important to consider where we are at compared to this time last year or even five years ago. While waiting for a further prices drop, external factors such as oil price, currencies, investment funds and unforeseeable political developments can drive prices upwards in an instant.
The most popular categories of feeds purchased by farmers on forward contracts fall into three categories: energy; protein; and digestible fibre sources.
Maize grain is the most popular source of energy. With its high starch and energy levels maize is ideal for almost all rations, in particular for intensively fed animals.
But if it is coming directly on to the farm suitable equipment must be available to finely grind the grain. Coarse rolling is not advised, unless the grain is being alkaline treated. The option to have it flaked or finely ground might also be available if the grain is coming via a feed-mill.
It is also possible to forward buy Irish feed, namely barley, wheat and oats.
I will cover the use of homegrown cereals and various treatment methods in greater detail closer to harvest with better indication of pricing and quality.
Traditionally the most popular protein source fed on Irish beef farms was corn gluten. However, its use has waned in recent years due to variation in quality.
Maize distillers have replaced corn gluten in a lot of cases, with its superior analysis for both energy and protein. For younger stock and in diets that have requirements for higher levels of protein, soya is the protein source of choice. It has significantly decreased in price from the record highs of last year.
Where beet and maize silage are being fed, it makes sense to consider the inclusion of rapeseed meal.
Beet pulp, soya hulls and citrus pulp constitute the main digestible fibre sources. They are fed mainly to help improve rumen health. It is important to understand that these feeds are fed as a fibre source rather than a carbohydrate source. With falling cereal prices, these digestible fibre sources are becoming less attractive due to their lower energy density.
Gerry Giggins is an independent nutritionist from Co Louth