Latest farm input cost forecasts are now published
Thursday, 28 January 2021
By Charlie Reeve
AHDB’s latest Agri-market outlook is now available on the main AHDB website. It aims to outline and forecast industry projections for the different livestock sectors.
In the recently published Farm Inputs Overview we have outlined our projections for how input costs are likely to change in the coming months. In the report we look at a variety of cost centres including fuel, feed, exchange rates and labour costs to name a few.
Fuel
On farm fuel costs are currently increasing steadily after a significant drop back earlier in 2020. Crude oil prices are forecast to rise in 2021, with industry estimates ranging from $44/barrel to $65/barrel.
Fertiliser
During 2020, fertiliser prices dropped back on the previous year. Looking forward, reports from the wider industry forecast prices to rise by around 3% to 5% in 2021 year-on-year.
Hay and straw prices
Both hay and straw prices have been making gains for several months now. With demand remaining strong, and tight supply across the UK, prices are likely to remain strong in the coming months.
Feed prices
Feed wheat continues to hold a significant premium to feed barley, although they are both up on the previous year. Global grain markets are getting a lot of support at the moment so the outlook for both wheat and barley prices remains bullish.
Oilseed markets have also been well supported, Soyabean prices are up year-on-year and with demand remaining strong from China, global prices are likely to remain high in the coming months. Maize prices are up on this time last year, although global demand for ethanol is still below pre-pandemic levels.
Exchange rates
Sterling has been strengthening against the US dollar for several months now, which makes feed ingredients imports from the US (priced in dollars) appear cheaper, whilst exported goods form the UK to the US may be less price competitive. Sterling however currently remains fairly weak against the Euro. This is helping to support UK lamb exports to the continent, although it may also have a more negative impact on the cost of imported supplies from Europe such as fertiliser.
Forage Overview
Total average grass production was slightly down year on year during the 2020 grazing season. Grass growth was limited by lack of rainfall during May although later into June and July, grass growth improved well before beginning a steady downwards trend into the Autumn. Heavier rainfall throughout the autumn has resulted in some areas becoming saturated, where livestock has had to be brought inside earlier in the year than anticipated. This is likely to lead to higher on-farm feed costs and less out-wintering. Grass growth has varied across different regions of the UK throughout the year, with some regions experiencing better grass growth than others, especially on the west coast where rainfall was more prevalent earlier in the year, and therefore less impacted by dry conditions.
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