Compound feed production in the EU-28 in 2015 reached an estimated level of 156.1 million tonnes, according to data provided by FEFAC members.

Feed costs remained low and even decreased compared to 2014, due to a good 2015 cereals harvest in the EU, both in terms of quantity and sanitary status, and a largely sufficient supply of oilseed meals globally, especially soybean meal.

This compensated the still decreasing pigmeat quotations to a certain extent, at a time when pigmeat production continued to increase by close to 1 per cent in 2015. At the end of the day, in spite of the economic incentive to pig farmers to use their own cereals, industrial pig feed production remained stable in 2015.

As regards cattle feed, the picture is as usual very contrasting across Europe, depending on weather conditions for forage production. The effect of the quota regime, with a +1 per cent milk delivery expected in 2015/16 vs 2014/15, was hardly visible for the compound feed industry EU-wide, with an overall 1 per cent decrease in industrial cattle feed.

Finally, poultry feed production continued to increase by almost 2 per cent in 2015, boosted by an increasing per capita consumption of meat (+2 per cent), which benefited primarily poultry meat (+2.5 per cent). As a consequence, poultry feed consolidated its position of leading segment of EU compound feed production, now well ahead of pig feed.

Like in 2014, Poland has been the best performing among the largest feed-producing countries, with annual growth of +4 per cent, boosted by the demand for poultry feed which has turned Poland into the largest poultry producing country in the EU.

In parallel, Germany, France, Spain, Italy, UK and The Netherlands saw their total compound feed production change between -0.5 and + 1 per cent. Germany strengthened its position as a leading EU country in terms of total compound feed production, before Spain and France.

Market Outlook for 2016

FEFAC market experts are relatively pessimistic concerning industrial compound feed production in 2016.

Although they foresee the upward trend on poultry feed demand to persist, although at a lower pace than in 2015 (+1 per cent), a significant reduction in pig feed demand (-2/-3 per cent) can be expected, in line with expert forecasts on pigmeat production in the EU.

So far, the weather conditions have been very favourable to forage in Northern Europe with relatively warm temperatures, which should weigh on the demand on cattle feed (-1 per cent expected again in 2016). Overall, this would lead to a 0.5 per cent decrease in compound feed production in 2016 vs 2015.

A number of parameters may affect this picture of course. For example, the impact of El Niño in the Southern hemisphere, that may impact on the evolution of the global dairy market, the risk of rain deficit in South Europe, the disease outbreak threats (Avian influenza, Bluetongue, African Swine fever). The ongoing negotiations with Russia on sanitary aspects, if concluded positively, could reactivate exports of certain pig products to Russia and alleviate the pressure on the pigmeat market.

Feed quotations have been on the downward trend since 2013 and the good global 2015 grain and oilseed harvest is expected to maintain this trend in the beginning of 2016. However, prudence is required, with uncertain impact of the drought in Northeastern Brazil on 2016 soya harvest.