Worrying Signs

Posted by Nogger - a legend in his own mind at 15:43 | Categorized as

04/03/11 -- The warning signs have been there for some time as we near the end of what has been a long and extremely difficult winter for the livestock industry not just in the UK, but in Europe and worldwide too.

As the supermarkets continue to rack up obscene profits, whilst doing their best to hold back price increases - strictly and selflessly with the best interests of the housewife in mind you understand - livestock farmers are feeling more than their fair share of the pinch.

A report out yesterday from BPEX reveals that in the 12 weeks to 23 January 2011, British pig producers accumulated losses of GBP35 million. Yet in the same period the processing sector's profits are estimated at GBP100 million, and retailers raked in combined profits of GBP192 million from pork and pork product sales.

There are similarly depressing stories to be found across the beef and poultry sector too.

Unsurprisingly, against a backdrop like this, much of the trade gossip reaching my ears this week has been about cashflow getting squeezed hard.

Merchants and compounders, whilst fully sympathising with the farmers plight, are bemoaning how difficult it is now becoming to get the monthly feed bill settled.

Contagion is the buzz word at the moment, with all the goings on in North Africa and the Middle East, and there's certainly plenty of that in evidence in the feed industry at the moment too.

Cashflow down the line is now starting to slow up from what people are telling me.

Meanwhile after last week's wobble, wheat, corn and soybeans have not just stabilised in price but actually started moving back up again. The only problem is end users who want to buy anything are nigh on impossible to find.

If you don't believe me email me to let me know what you want to buy as I have resellers of just about everything.

The only volume trades I am currently hearing of involve longs being sold back to shippers unwinding their shipping programmes.

London wheat might be GBP200/tonne, but wheatfeed pellets are now around GBP50/tonne less than that because it's physical kit that needs a home, not a piece of paper being passed around by batty boys.

As the livestock boys bail out we also have the hurdle of increased short-term meat supplies to get over. Ultimately of course that will create a shortage, and a corresponding increase in price, but we aren't there yet.

For the feed industry that means a long quiet summer lies ahead methinks, it certainly looks like it's going to get worse before it gets better from where I am standing. Still, look on the bright side, if there's no demand for feed then at least your cashflow is going to improve! Every cloud and all that.

Right, now I've got that little lot off my chest it is now most definitely beer o'clock....