El Niño Could Help UK Feed Suppliers

El Niño weather cycles tend to cause much longer, colder, and drier winters in Europe according to Met Office meteorologist, Thomas Shafernaker, as was seen in 2010 when an El Niño system caused huge amounts of snow it hit the UK.

Some climatologists are speculating that another El Niño system currently building could “lead to one of the coldest and longest UK winters in record,” giving rise to a bullish stance for UK feed groups, as a particularly severe winter could lead to the need for higher volumes of bought feed.

This speculation comes on the heels of a challenging period for the UK feed sector as demand from dairy operators softened with plummeting dairy prices. UK feed production increased by only 0.9% in the May to July period of this year as a result of a decline in cattle and broiler chicken numbers despite increases in pig and sheep numbers according to official statistics.

Although conditions in the dairy industry have been difficult, values at the GlobalDairyTrade auctions have been recovering since the beginning of last month – an indication that dairy prices may have indeed bottomed-out. Supporting this supposition is the fact that Danish dairy processing giant, Arla Foods, announced it was increasing the price it paid its dairy farmers by 0.5 Euro cents per liter. Upon currency conversion, this increase equals 0.38 pence per liter on paper for UK producers, but a currently strong pound limits the increase in real terms to 0.03 pence per liter.

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