The information below has been supplied by dairy marketers and other industry organizations. It has not been edited, verified or endorsed by Hoard’s Dairyman.
Call it a perfect storm or a series of unfortunate events, dairy producers around the world have seen an uptick in bought-in feed costs as the global market pulls through a pandemic, extraordinary weather events, logistic disruptions and growing competing markets for raw feed ingredients.
Looking at historic data, this has been a time of unchartered waters for the global feed ingredient market – but in the works for a while, says Arlan Suderman, Agricultural & Soft Commodities Market Analyst for StoneX trading group.
“The purpose of the market is to bring supply and demand into balance. Low prices discourage production while stimulating demand. The opposite is true as well. Global feed demand has been increasing for a number of years, but several years of low prices discouraged sufficient expansion of production,” explains Suderman. “Several contributing factors acted to speed up draining supplies while money supply rose $4.6 USD trillion during the pandemic. A portion of that money made its way into the markets, making it easier for buyers to bid up prices in a short market which amplified and sped up market response. The role of high prices currently is to encourage expanded production in the world to bring it back into balance with this expanding demand base.”
Weather impacts soybean supplies