Animal feed production outlook

February 2025

• Increased demand for GB compound feed from cattle and sheep sectors
• Increased cereal inclusion over alternative proteins in 2024/25
• Upwards potential for feed grains short term
• Bearish outlook for oilseeds will limit feed price rises

Compound feed demand on the rise

Compound feed demand is expected to climb again this season (following a considerable decline in 2022/23). This increase is driven largely by a rise in cattle feed production and, to a smaller extent, sheep feed. The climb in demand by these sectors outweighs falls in pig and poultry feed demand.

The chart below shows cumulative GB compound feed production for each sector from July to December this season.

The sector seeing the greatest change in compound production so far this season is sheep, up by 19% on the same period a year earlier, with strong demand for ewe feed for the first half of the marketing year (Jul 24–Dec 24). However, the greatest change in volume terms is cattle feed production, up 112 thousand tonnes (Kt) year-on-year.

Settling agricultural input costs are a contributing factor to the increases in production in the cattle and sheep sectors. Easing feed and energy prices in particular have led to a more positive margins outlook on the dairy side. The milk-to-feed price ratio is also encouraging increased milk production. On the other hand, ongoing concerns regarding avian flu prevents recovery in the poultry sector, while further declines in the female breeding pig herd impacts demand on the pig side.

Although GB compound feed production is forecast up on the year, it is worth noting that, due to the much smaller UK harvest, the amount of grain fed on farm in 2024/25 (Jul 24–Jun 25) is forecast to decline.

A change in raw material splits

Aside from a change in overall production levels, the split of raw materials has also changed somewhat on the year.

Cereal inclusions are expected to remain firm this season due to the relative price of alternative proteins, which is also driving the increase in total cereals demand outlined above.

The chart below shows the split of the key raw materials used in GB compound feed production from July to December this season. The greatest percentage change in raw material usage is for maize, up by 33% this season so far (Jul–Dec). The greatest decline was for oilseed rape cake and meal usage, down by 5% on year earlier levels.

A higher proportion of maize usage so far this season is due to the competitive price of the imported grain at the start of the marketing year. In AHDB’s latest UK supply and demand estimates, however, it is outlined that maize usage is expected to drop off towards the end of the season with prices rising against other cereals as of late.

A drop in usage of oilseed rape cake and meal is perhaps unsurprising given the limited supply of oilseeds both domestically and on the continent this season.

As highlighted in the chart above, wheat usage in compound feed production has fallen back on the year and is significantly lower than the previous five-year average. Due to a tighter UK supply and demand balance, as well as support in global wheat prices compared to other proteins, domestic wheat prices have not been competitive this season.

Price direction

While global maize prices were at a significant discount to UK feed wheat futures at the start of the season, that gap has since narrowed. Global maize prices have been supported, with less support in wheat markets. Moving forward, this will likely lead to an increase in the proportion of wheat (and barley) being used in rations towards the end of the season and into the next.

In terms of price direction of feed grain, overall, we are currently forecast to be in a global grain deficit for the 2024/25 season. A fall in global grain production is largely due to a fall in maize production, with uncertainty over the size of the US crop, and revisions being made to South American maize crops over the past few weeks. As such, maize is a key driver in markets at the moment and is underpinning the wider grains complex. Slowing Black Sea exports is another factor supporting feed grain prices, as well as concerns over weather conditions in major exporting countries.

For oilseeds, the limited supply of oilseed rape both in the UK and globally has supported rapeseed prices over the past year. Soya beans, though, have priced more competitively. In the short term, oilseed prices still have some upwards potential with support in vegetable oil markets, and with the rapeseed balance expected to remain tight. However, in the longer term, heavy Brazilian soya bean supplies are forecast, which could limit price gains looking ahead. Uncertainty over US tariffs also weighs on soya bean prices.

Conclusions

Cereal inclusion in feed rations is expected to remain firm until the end of June 2025. On the feed grains side, there are currently (February 2025) multiple supportive factors in global grain markets which could lead to an increase in feed prices in the medium to long term (due to a lag from forward buying).

However, with a more bearish outlook on the oilseeds side due to heavy soya bean supplies, price increases will be limited in the longer term, with a likely switch to greater use of alternative protein over feed grains next season if the current outlook continues.

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