The price of feed for the livestock sector is largely determined by world prices for cereals, oilseeds and other commodities. Recent price increases have been driven by a combination of factors, some of which are shorter term and introduce volatility into the market (e.g. adverse weather leading to lower production) and others of which are longer term trends (e.g. increasing use of cereals and oilseeds for food, feed and fuel uses). Current high prices, combined with policy changes such as the removal of the set-aside requirement for the 2008 harvest, will undoubtedly stimulate production and lead to a moderation of prices, but it may take a number of years to rebuild stocks to levels that markets are comfortable with. A fuller assessment can be found in our recent report “Implications of rising agricultural commodity prices” which can be found at:
http://statistics.defra.gov.uk/esg/publications/monthly%20brief/Annex%201%20Food%20and%20farming %20brief%20-%20impact%20of%20high%20commodity %20prices.pdf
Projecting future commodity prices and hence the price of feed for the livestock sector is uncertain. A number of international organisations produce projections, including the OECD and the EU Commission, the latest of which are given as follows. However, it should be noted that these were compiled before the recent price increases.
OECD/FAO agricultural outlook 2007 to 2016
EU Commission Prospects for agricultural markets and income 2007-2014