Feed Price Outlook

[SourRoses]

I wanted to start a discussion on what the future outlook for feed pricing might be as things change here in the US and globally.
Basically I want to have advanced notice whether to stockpile feed, despite worries of freshness, storage capacity, and budget.

Many feed ingredients are locally sourced, but others are imported and not cheaply replaceable here (according to my understanding?).

What part might the latter play in future feed prices?
How is the relevant US crop outlook shaping up as we move into this year?
What US consumer goods (for people) might be encroaching on feed ingredients due to new challenges?


* Please respect the forum rules when it comes to mentioning the cause of any changes, so this thread can remain open and dialogue continue (aka "Don't go there").

 

[Al Gerhart]

No question we living both exciting and unpredictable times. I see China reducing even more of US grain purchases where they can, shifting to anything available from South America, but I heard there was some drought late last year so I have no clue on the crop forecast.

The deportations aren't likely to mess with grain supplies, not a lot of illegals working on grain farming operations, very automated/big equipment, less need for manual labor. Ditto come spring, there will be harvesting crews that already are highly paid and mostly citizens/farmer family sourced.

Processing, might see some tightening labor with deportations, again very automated.

Demand, with the need to replace laying flocks to to the various flu strains there will be increased demand but they are usually bringing on around three million replacement hens annually and cranking up more might be problematic. I can see small hatcheries not connected with the big poultry companies gearing up to push out as many chicks as possible because there will be a boom in new backyard flock owners I believe. I'd order chicks early if I needed any. Assuming the small hatcheries flocks are healthy they should have no problem keeping up with demand. I mean if a hen can crank out 250 to 300 eggs a year, that is a lot of capacity in a crunch.

I store whole grain only for long term emergency stores. Products like pellets and crumble don't store well long term, the oil goes rancid once the oil seeds are milled. Things like corn aren't great chicken feed but should things go belly up, it will do. It can be traded, ground, turned into hominy then flour, used to make hooch, or planted. Ditto on wheat and even soy beans if you know a bean farmer with a silo full. Grind as you need, won't oxidize too quickly.

But, now is the time to tighten up those coops, work on both bio security for disease and to prevent feed theft. Feed got expensive during Covid, even hard to find. Look over stocks of inexpensive but potentially critical things like anti biotics or pesticides and stock up if it is something you will use anyway to beat inflation and potential short supply.

No toilet paper though. Please leave the toilet paper out of this this time around.

 

[TOMTE]

I don't think feed prices have gone up (yet) at our farm store. About $23 per 50# bag of Kalmbach 20% flock maker. Will definitely be paying attention though.

 

[allosaurusrock]

Watching people panic buying chickens makes me nervous for how feed prices might be affected. I’m not sure if the industry is prepared for such a large increase in demand.

That being said, there’s going to be a lot of cheap hens and free meat roosters in about 4-5 months.

 

[Iluveggers]

I'm lucky to have a local feed mill that charges $13 per 50# bag of layer, and $16 for starter/grower. Theres a couple local mills within 20 miles, so I am hopeful I can stay ahead of any supply issues that may creep up. Fingers crossed!

 

[saysfaa]

..feed ingredients.. are imported and not cheaply replaceable here (according to my understanding?).
...

Which are these? I wouldn't be too surprised but it just hasn't hit my radar. Sorry, I don't have anything for the other questions.

 

[SourRoses]

Many feed ingredients are locally sourced, but others are imported and not cheaply replaceable here (according to my understanding?).

Which are these? I wouldn't be too surprised but it just hasn't hit my radar. Sorry, I don't have anything for the other questions.

I was thinking of wheat and oats... I don't know what percentage of farms in the US grow those crops, but I did see that we import from Europe. Every farmer I've met in the Breadbasket grew soy or corn. Or soy and corn, lol.

Scenario: Let's say a wheat breakfast cereal was importing the wheat from Europe. As tariffs drive up the price, they switch to US grown wheat that used to be more expensive but now is cheaper.
As that major manufacturer is buying a lot of wheat to feed a huge human market, now the US flour maker is paying a bit more to grind the same US grown wheat they previously sourced. Then another breakfast cereal, then a major pasta maker... and so forth. So now the price of US grown wheat is high, supply is limited, and there are no affordable options outside our borders.
Wheat is now too expensive and hard to get to incorporate it into animal feed, including many species of livestock.
So now all the animal feeds rely even more on corn, right?
What then happens if the human market says "shoot, forget those wheat thins, let's all eat corn flakes". The corn price boost sounds nice for US farmers, but then not so much as it comes back around on livestock farmers.

I'm no analyst...
Is this a plausible scenario? Probable?
To answer that question, I started this thread in the hopes our group knowledge - especially from the experts - might combine and tell us the future of chicken feed pricing. Hehe.

Also, aspects of the vitamin pre-mix. Where is Methionine powder manufactured? What is the hardest thing to replace that might not be on our radar?

 

[Al Gerhart]

I import and export so I have a limited knowledge of these things, at least in some markets.

First, if I bring in a container of MDF from China into the Philippines it costs around $9 per 3/4" sheet. China has subsidies that pay all of the internal costs, shipping from factory to the pier, loading it on the boat, paying any warfage fees, shipping it to the Philippines. I just pay the negotiated price of $9 per sheet x say 470 sheets. Once it arrives in Manila, I'll pay around $3000 for import fees, wharfage fees, trucking fees, to shift the 40' container around 90 miles. If I was not in a freeport zone with a lot of restrictions but the ability to import tariff free for manufacturing and re export, I would pay another 35% in tariff and VAT. Call it $15 per sheet landed costs.

If the Philippines increased their tariffs on Chinese goods, my supplier would either lower the per sheet cost to remain competitive or they would lose my business, I'd buy from Thailand instead. Landed at the pier price is what I would consider.

Now, I take that MDF, turn it into cabinet parts, then ship it to the U.S., I would pay another $3000 in local trucking, permits and fees, wharfage fees, inspection fees and the like to get it on a ship. Then ocean freight might add $2000 to Long Beach CA, another $2000 roughly to get it rail-roaded to Dallas and then trucked into Oklahoma. My original cost was $4230 plus the $3000 importing costs, then another $7000 getting it to Oklahoma. Roughly doubled to under $30 per sheet and change.

Add around 4.5% use tax, now compare that to the $39.00 per sheet (at the time of this transaction) plus almost 10% state sales tax.. Under $30 er sheet versus $45.85 for the locally sourced MDF sheet.

I left out the U.S. importing fees because they are almost non existent (at the time of that transaction). $250 roughly plus an annual, no limit bond, usable for one year going to U.S. Customs, good for as much as I want to import that year.

Say the orange man puts the same tariff on incoming Philippines exports as they put on our U.S. imports into their country, I pay 35% (maybe less if they don't count the VAT tax which is similar in some ways to our sales tax) on the roughly $14,000 and cost. Tack on another $5000, my cost is right where the U.S. bought MDF sheets would be.

But, two things. First, the tariffs would be short lived, the Philippines would be forced to drop their tariffs or see their export trade collapse. That would drop around $7500 in costs off the total landed cost, roughly $15 per sheet.

Second, I was able to process that MDF into cabinet parts using a loaded labor cost (overhead/labor/taxes) of under $2.50 per hour.

So, commodities like grain and MDF sheets can be sourced from different countries but what matters is the landed costs, not the shipping costs or the tariffs or the original cost, the landed costs. A country like the Philippines charges boat loads of tariffs and VAT tax, external revenue coming from companies outside the Philippines. Only paid by the citizens IF they cannot manufacture the product in their own country. And it only gets that money if their trade partners or stupid or were using trade policy for other reasons. Clue there....

For the U.S., that reason was the cold war. Our government threw the American worker and manufacturer under the bus and allowed other countries to import into the U.S. for nearly zero in costs and tariff or tax in return for standing on our side, sometimes in front of us, in the cold war. Our jobs and manufacturing and the massive supply chains moved overseas.

Now the cold war is over with only the war mongers, RINO republicans and the Democrat Party still pushing war for business reasons and to skin out bribes and allow corruption to fill their coffers or to pay their allies.

So, feed prices might go up due to tariffs for minerals and supplements having tariffs placed on them, but eventually those tariffs will be gone along with the tariffs placed on U.S. grain shipped overseas. Grain prices will drop during the trade war, then stabilize back to normal once the competing tariffs have been removed. If the tariffs don't drop, then manufactures such as myself will shift manufacturing back to the U.S., like I did at the start of Covid simply due to outrageous container shipping costs and delay at port adding thousands of dollars to the port fees and costs (demurrage).

What do we do as flock owners? Stock up with enough feed to last six months, assuming it won't go rancid and commercial rations do do that. Or do what the big boys do and buy future contracts to hedge your feed costs. You aren't doing that I will guess. So stock up with whole grains that won't go rancid.

Eventually the tariff wars will end, more free trade will happen, but the balance of trade will be more fair. I can ship in cabinet parts, maybe feeders at some point, but this time I can refill that container with Oklahoma wheat or Arkansas timber. I'm already paying for that 40' container to be returned to Long Beach, if the Philippines tariffs on U.S. products go away I'll make more shipping stuff into the Philippines than I do shipping stuff to the U.S.. Costs fall, making everything more affordable and I can sell more cabinets and more feeders due to the cheaper, more affordable price.

 

[saysfaa]

I was thinking of wheat and oats... I don't know what percentage of farms in the US grow those crops, but I did see that we import from Europe... Every farmer I've met...

Climate matter a lot for where which grains are grown so don't go by what you see locally. But you are right that production of oats has dropped in the US. Part of the issue seems to be lack of elevators that will handle it - evidently in the in the areas oats are grown because it doesn't seen that much different than wheat. I think it the smaller facilities getting pushed out. That worries me more than the drop in production. It takes only one year to change how much of what is grown but it would be hard for to justify investing in the buildings and equipment given the expectation of drastic swings in the economic conditions.

Still, I was surprised at how much oats we import. And export too, oddly enough. I think I will up the size of my steel-cut oats reserve (for feeding us people).

I don't mind feeding corn/soy to chickens so am not very worried about oats for them. Especially after I learned the hard way what too much oats does to a chicken's digestive system.

Scenario: Let's say a wheat breakfast cereal was importing the wheat from Europe. ...

I'm no analyst...
Is this a plausible scenario? Probable?

Yes, in concept certainly. I think it would be wise to carry a bigger inventory margin than normal. Maybe restock more often or store more - which makes more sense is too dependent on individual circumstances to pick one for anyone else. And a bigger budget margin than might otherwise be comfortable. It makes sense to do things like plan alternatives. Doing such things has a cost too in time and energy spent if nothing else. Still worth doing to some point at least.

Thank you.

 

[Yardfulla poopers]

Watching people panic buying chickens makes me nervous for how feed prices might be affected. I’m not sure if the industry is prepared for such a large increase in demand.

That being said, there’s going to be a lot of cheap hens and free meat roosters in about 4-5 months.

I agree. I went to get a few more more chicks as I do every year and it was like old-time black Friday. I was 5th in line and those ahead of me were buying 20 or 30 and asking me for advice on brooding!! There will be lots of hens/roosters for sale soon or being dropped in the countryside for us farms to absorb.