Fields of various forage

April 2021

For the last few months I have been creating and distributing the internal raw material graphs. In order to increase my knowledge further, I decided to get in touch with the raw materials team. Find out how I got on by reading this month's blog.

Raw material markets

The global raw materials market is extremely volatile and is constantly changing every day. I was fortunate enough to be able to spend some time speaking to Sarah Bond who is a Raw Materials Manager. Sarah gave me a great insight into these markets and explained how the purchasing of these commodities is processed.

Here at ForFarmers there are a team of buyers and Sarah's main focus is the purchasing of rapemeal, soya and sunflower covered proteins which she buys for all of the UK mills. Grain, palm kernel, sugar hulls and NGFI (non-grain feed ingredients) are purchased by other members of the team which include Will Foote and Stefan Benfield.

Fluctuating prices

Working with figures supplied by the Raw Materials Managers I create daily and weekly graphs. It's important to note that these are prices aren't necessarily the price that the materials are purchased for, but they do provide a valuable insight into the markets.

The prices also take other factors into consideration which include the weather, logistics, harvesting conditions and of course supply and demand.

Cereal prices graph

5 Factors that effect markets

1. Demand

When buying raw materials demand is often the main and pivotal factor. If buyers aren’t purchasing because the prices are high, too much stock will be left so consequently the sellers may lower their prices in order to move the stock on. In another situation demand may be high and supply may be short, this results in increasing prices. This supply and demand process constantly fluctuates and really effects the market dynamics.

2. Weather

Weather conditions can influence a market considerably. Prices move up and relax if the production of food is going down. However if we have some cold weather or an influx of rain in the UK at a crucial time, this might have a big effect especially if the crops are late to harvest or yields are greatly reduced. Untimely weather conditions hot, cold, too dry or too wet, can push the market back and can make prices volatile.

3. Financial investors

Another effect on market prices is the impact of financial investors making transactions in the commodity markets. This is when people use commodity transactions as an alternative form of an asset, this drives the market to change as they buy to push prices up and sell to push prices down, which has an effect on the raw material market even though it is not directly related to the industry.

4. Currency

Factors of the Pound against the Dollar and Euro can also have an effect. If the Pound is stronger than the Dollar and Euro then this can help make an import of raw materials cheaper, however if it is weaker this can have a negative effect and make it more expensive.

5. Bulk buying

Bulk buying and large nations such as China influence market movements for raw materials. China for example buy around 50% of the world’s soya bean exports, in addition to large proportions of maize and many other crops. As a result, if China are buying and importing a lot of produce then this will drive prices up as there will be less access to material, however if they are buying less and are quieter on the market radar there will be a more level playing field.

Reusable raw materials

A lot of products used for animal feed are actually by-products. They may not be required or useful for other industries. By utilising these products we are helping the environment by reducing waste and recycling them back into nutritional animal feeds. This circular approach features in our new ForFarmers 2025 strategy.

Here below are some example by-products which ForFarmers purchases, processes and adds to a range of feeds and blends.

US dark grainsĀ 

Half of the maize produced in the US is used for ethanol and through this process a high protein meal of around 30% is left as a by-product. Due to it's nutritional composition this meal is a great addition in cattle feeds and can be mixed into blends or used in a pelleted form.

Wheat feed

This raw material is a by-product from flour milling, consisting of wheat bran, endosperm and other starch properties after the husks are removed. Wheat feed is high in digestible fibre at around 8.5% and is balanced in terms of energy and protein. Due to these characteristics it can be used in a variety of livestock feeds and systems.

Palm kernel

Palm kernel is left over from the extraction of palm oil. The meal is rich in vegetable fats and has high levels of crude protein at around 7-8%. This makes it a good supplement for most livestock and is combined with high energy feeds such as molasses.

There are lots of different by-products for example biscuits, sugarbeet, rapeseed meal and field beans. These are used to create high performance diets for livestock and help reduce waste by being more sustainable and innovate.

A useful insight into the core ingredients

Philippa working from home

Overall by having an insight into the market has allowed me to learn where the process really begins when making commercial animal feed. From the crop in the US to the mills in the UK, it's been interesting to follow the whole process.

I’d like to thank Sarah Bond for taking time out of her busy day to talk me. She has helped me understand market dynamics, movements and trends.

I'll carry this knowledge and experience with me especially during my final year at university.