Swine Producers Encouraged to Prepare for Anticipated Higher Winter Feed Costs -
CANADA - Farm-Scape: Episode 2218. Farm-Scape is a Wonderworks Canada production and is distributed courtesy of Manitoba Pork Council and Sask Pork.
13 August 2006
6 minute read
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“The first thing is the weather has had an impact on barley production this year,” states Canadian Wheat Board Weather and Crop Surveillance Director Bruce Burnett. “Certainly the barley crop has been impacted by the dry hot conditions this summertime. At the Wheat Board we’ve reduced our estimate 700,000 tonnes from our June estimate and down close to two million tonnes from last year’s production, down to about 9.8 million tonnes. [That] would be one of the smaller barley crops that we’ve produced in the last five years, although certainly not as low as in the very severe drought year of 2002.”
He adds, “In terms of the harvest quality of the wheats, which again gives you some of the feed grain supplies out there, on the spring side it’s a little bit early to tell. Certainly it’s positive that we’re starting on an early harvest for quality just because that generally lends us to having more grades up in the milling category.”
However, he notes, “In terms of the winter cereals, that are almost all harvested, very few parts of the winter wheat harvest have been downgraded this year. It’s come in in very good quality so the supply of feed from the winter cereal harvest is going to probably be down year on year at least anyway.”
He explains, “Over the past few years feed costs have made up around fifty to sixty percent of the total cost of producing hogs so any feed price increase is going to have a substantial impact on the bottom line for pork producers on the prairies.”
He points out, “Most producers who purchase feedgrains have supply agreements with local farmers to ensure they have an adequate supply of feed. And, if producers have the opportunity to extend these supply agreements forward at current prices, it’s probably a wise decision. The other thing producers can do is use the Winnipeg Commodity Exchange and lock in delivery contracts for feed wheat and barley and you can do this up to one year in advance.”
He notes, “Both barley and feed wheat futures have been steadily increasing over the summer. October 2006 barley contracts are trading around $130.00 a tonne while the July 2007 contracts are trading around $150.00 a tonne. Until May you could have locked in that July 2007 contract at $135.00 to $140.00 a tonne so the future contracts, up to a year in advance, have increased by about $10.00 a tonne.”
He suspects, “Probably the people trading in these futures have been listening to the weather and the market reports.”
He explains, “Typically we use a lot of barley and wheat based diets but one thing we can’t forget about is energy levels. Energy levels, when formulating a diet, have to be considered as one of the leading costs. Energy is going to be at a premium.”
He suggests, “Producers can use tallow, vegetable oils or they can source it directly from a grain and corn is pretty much our highest energy grain. With ethanol being developed corn prices will be going up.”
However, he stresses, the common feeling among analysts is that the anticipated higher corn prices have not yet been a factor in futures prices and many are encouraging producers to hedge corn or to buy corn on futures.
Beaudin insists, “Farmers are going to have to look at all their sources for energy. It's going to be even more important to look at grain specifically for what energy there is in it... if it’s barley or wheat or corn, to optimize the least cost based on energy.”
He predicts, “That’s going to be an increasingly important factor when balancing rations. Finding sources of tallow and vegetable oil or offsetting that with more corn, these are all things farmers are going to have to better look at and take it seriously to get a least cost ration.”
He advises producers to consult with the marketing agency from which they purchase corn and look at opportunities to secure their energy sources.
He notes, “It looks like, over the next couple of weeks, we’re going to move into maybe a slightly wetter rain pattern which would be of concern however it doesn't look like there’s any large wholesale change in the weather that we’re going to receive in the start to middle of August.”
Staff Farmscape.Ca.
Farm-Scape, Episode 2218
Western Canadian swine producers are being encouraged to consider a range of options for keeping a lid on expected higher feeding costs this winter. The 2006 harvest of fall seeded cereal crops is now over 80 percent complete and is expected to wrap up within days while, on the spring seeded wheat and barley side of things, progress ranges from well underway in the dryer areas of Manitoba to just getting underway further west into Saskatchewan and Alberta.Wheat Board Predicts Reduced Prairie Feedgrain Output
According to the Canadian Wheat Board's (CWB) latest production estimates, released last week, the 2006 western Canadian barley crop is expected to be substantially reduced from last year while less of this year's wheat crop is expected to grade as feed.“The first thing is the weather has had an impact on barley production this year,” states Canadian Wheat Board Weather and Crop Surveillance Director Bruce Burnett. “Certainly the barley crop has been impacted by the dry hot conditions this summertime. At the Wheat Board we’ve reduced our estimate 700,000 tonnes from our June estimate and down close to two million tonnes from last year’s production, down to about 9.8 million tonnes. [That] would be one of the smaller barley crops that we’ve produced in the last five years, although certainly not as low as in the very severe drought year of 2002.”
He adds, “In terms of the harvest quality of the wheats, which again gives you some of the feed grain supplies out there, on the spring side it’s a little bit early to tell. Certainly it’s positive that we’re starting on an early harvest for quality just because that generally lends us to having more grades up in the milling category.”
However, he notes, “In terms of the winter cereals, that are almost all harvested, very few parts of the winter wheat harvest have been downgraded this year. It’s come in in very good quality so the supply of feed from the winter cereal harvest is going to probably be down year on year at least anyway.”
Sask Pork Predicts Higher Feed Costs
Saskatchewan Pork Development Board (Sask Pork) policy analyst Mark Ferguson suggests, “If the wheat board is correct and the supplies of lower quality wheat and the total supply of barley is down in the fall it is likely that feed costs will increase on the prairies and the question is how much and when.”He explains, “Over the past few years feed costs have made up around fifty to sixty percent of the total cost of producing hogs so any feed price increase is going to have a substantial impact on the bottom line for pork producers on the prairies.”
Producers Encouraged to Lock in Prices Early
Ferguson notes, “There’s tools available to help them. Depending on how a producer views the feed grain supply situation a futures contract might be a good idea. They can also lock in a feed price ceiling using options.”He points out, “Most producers who purchase feedgrains have supply agreements with local farmers to ensure they have an adequate supply of feed. And, if producers have the opportunity to extend these supply agreements forward at current prices, it’s probably a wise decision. The other thing producers can do is use the Winnipeg Commodity Exchange and lock in delivery contracts for feed wheat and barley and you can do this up to one year in advance.”
He notes, “Both barley and feed wheat futures have been steadily increasing over the summer. October 2006 barley contracts are trading around $130.00 a tonne while the July 2007 contracts are trading around $150.00 a tonne. Until May you could have locked in that July 2007 contract at $135.00 to $140.00 a tonne so the future contracts, up to a year in advance, have increased by about $10.00 a tonne.”
He suspects, “Probably the people trading in these futures have been listening to the weather and the market reports.”
Manitoba Pork Council Encourages Increased Focus on Available Energy
Manitoba Pork Council's (MPC) swine program specialist and CQA coordinator Miles Beaudin recommends, when formulating rations, to keep on top of the energy content of the feed.He explains, “Typically we use a lot of barley and wheat based diets but one thing we can’t forget about is energy levels. Energy levels, when formulating a diet, have to be considered as one of the leading costs. Energy is going to be at a premium.”
He suggests, “Producers can use tallow, vegetable oils or they can source it directly from a grain and corn is pretty much our highest energy grain. With ethanol being developed corn prices will be going up.”
However, he stresses, the common feeling among analysts is that the anticipated higher corn prices have not yet been a factor in futures prices and many are encouraging producers to hedge corn or to buy corn on futures.
Beaudin insists, “Farmers are going to have to look at all their sources for energy. It's going to be even more important to look at grain specifically for what energy there is in it... if it’s barley or wheat or corn, to optimize the least cost based on energy.”
He predicts, “That’s going to be an increasingly important factor when balancing rations. Finding sources of tallow and vegetable oil or offsetting that with more corn, these are all things farmers are going to have to better look at and take it seriously to get a least cost ration.”
He advises producers to consult with the marketing agency from which they purchase corn and look at opportunities to secure their energy sources.
Spring Seeded Cereal Availability for Feed Remains Uncertain
Meanwhile Burnett stresses, “The spring wheat harvesting period for the overall prairie region will probably really be in full swing in about the second last to last week of August so that’s a little far out of the forecasting window to be too definitive.”He notes, “It looks like, over the next couple of weeks, we’re going to move into maybe a slightly wetter rain pattern which would be of concern however it doesn't look like there’s any large wholesale change in the weather that we’re going to receive in the start to middle of August.”
Staff Farmscape.Ca.
