Animal feed prices

IBISWorld estimates that the average price of animal feed will rise at a compound annual rate of 7.3% to reach £357.1 per tonne, over the five years through 2024-25. The prices reflect the cost of compound feed, which is a commercially produced mixture of animal feed ingredients that consist of raw materials and animal feed additives. These are blended together to produce custom feeds for different animals. Animal feed prices are primarily influenced by fluctuations in the cost of raw materials such as wheat, barley, oats and maize. Supply of, and demand for, other key cereals and grains are also important and can similarly influence prices. Changeable crop yields as a result of volatile weather can induce supply shifts which, if not mirrored by changes in demand can induce significant input price fluctuation. This typically affects animal feed asking prices.

Average prices of animal feed continued on a downward trajectory in 2016-17 but rose rapidly the following year on the back of rising crop prices. British wheat prices have hit their first annual average price increase in five years in January 2017 as a result of a smaller 2016 crop, which drove prices upwards. Feed wheat prices increased significantly after extreme dry conditions in the summer of 2018. Many farmers raised concerns of shortage in the market which contributed to rising prices. According to the Agricultural and Horticulture Development Board (ADHB), wheat production increased in 2020-21 from major producers in Australia and the European Union. This is expected to weigh on prices during the year. Prices registered gains in October 2020 supplemented by shortages of wheat domestically, despite high domestic availability of barley. The driving force behind the price increases is the continued pressure of Chinese soyabean demand, while changes in US grain production. In 2021, both feed wheat and barley prices have been increasing, with feed wheat rising significantly due to lower supply. According to ADHB, UK feed wheat averaged £204.50 per tonne, a 34% increase on the previous year. Wet weather which is expected to affect ground conditions and lead to reliance on purchased feeds, which could increase prices. Prices have continued trending upwards early in 2022, with cattle, poultry and sheep feed prices all rising sharply between January and March 2022.

Cattle and calf feed reached £280 per tonne over the three months through December 2021, rising over the three months through March 2022. As a result, animal feed prices expanded by 13.7% in 2021-22.

Prices have been rising sharply due to inflationary pressure and lower crop yields. Global wheat prices expanded significantly in June 2022 due the ongoing war between Russia and Ukraine, which limited supply. In July 2022, the two countries agreed to resume exports of grain, which resulted in a fall in prices. The conflict continues to roll on leading to a sharp expansion of 33.2% in 2022-23 as prices surged later in the year. Average feed prices are forecast to decrease by 10% in 2024-25.