During the XXVI FEFAC Congress "- How to Stay Profitable in Volatile Times" on 5-8 June 2013 in Kracow, FEFAC members have provided final estimates for the compound feed production for the EU-271 in 2012. The total production estimate is now set at 152.7 mio. t, i.e. 0.7% above the 2011 figure.
Pig feed has seen its production fall by -1.4%, whereas cattle feed recovered from its 2011 drop with a +2.4% in 2012. Poultry feed continued increasing by 1.5%, thereby confirming its position of leading segment of compound feed above pig feed.
The most important factors which have weighed on the EU feed demand in 2012 were the still fragile economic situation of the pig sector and soaring feed material costs.
Among the largest producing countries, UK and Poland performed well, with annual growth close to resp. 3% and 5%, boosted by the demand for resp. cattle and poultry feed. On the opposite side, The Netherlands and Hungary saw their production fall between -1.5 and -2%. The production volume in France Germany and Spain remained stable.
Production of poultry feed in Southern Europe was affected in particular by the implementation of the new welfare standards for laying hens.
The high cereals' prices over the last two years contributed to improve the competitive market position of industrial compound feed production vs. home mixing. However, this gain was offset to a certain extent by the development of alternative pig feeding strategies based on roughly grinded feed and liquid feeding.
Overall, Germany's position as leading EU country in terms of total compound feed production was strengthened, ahead of France and Spain who are "shoulder to shoulder" for the second position.
Outlook for 2013
FEFAC market experts foresee a stabilisation in poultry feed production, a further reduction in pig feed production (-1%) and a slight increase in cattle feed demand (+1%). Of course, these elements may be affected by weather conditions affecting the forages yields or disease outbreaks. Further market uncertainties are also linked to the impact of the implementation of the new group-housing requirements for sows.
Overall, compound feed production is expected to remain unchanged vs. 2012. The demand for agricultural commodities is expected to remain high in 2013, with the main consequences of maintaining quotations at a high level.
The quotations for agricultural raw materials increased significantly during the second half of 2012. After two major crop failures for soybean in South and North America, the positive impact on global quotations of the record harvest for soybean in Brazil in 2013 may be undermined by the storage and logistics challenges it could trigger.
On the cereals side, the record Brazilian maize harvest should also weigh on global quotations. However, the uncertainty is still important regarding the quantity and quality of the next harvest in the Northern hemisphere, due to bad weather conditions in major exporting countries. The average cost for supply of feed materials is expected to remain firm in 2013 to 2012.
