Feed Market Update
Feed markets have been through a turbulent 6 months, and whilst we have seen markets subside from record highs, there is still cause for concern as we progress through this year’s harvest.
Cereal markets
Looking at wheat and other energies, prices topped out at over £360/T for feed wheat in May this year, with prices this week around £90/T from the highs at £270. Some of these price reductions occurred following the deal between the Ukraine and Russia to allow exports of grain from Ukrainian ports. The trade estimates between 12 and 16 ships have now left Ukraine with over 20million Tonnes of grain left in Ukraine waiting to be exported.
Outside of Ukraine, hot and dry weather across Europe and the US is helping support energy crop pricing. Whilst some of the hot weather will not affect crops to be harvested this year, a lack of moisture could delay autumn drilling and keep prices elevated. As you can see from the below graph from the AHDB, grain markets are down from their highs, but have remained rather stagnant through July and August whilst the market assesses harvest data.
Protein and oil markets In protein markets, prices are sensitive to news. With rapeseed markets reacting to crude oil price changes and soybeans reacting more to weather reports from the US in particular. Longer term, large South American Soybean crops will likely cause a reduction in soya prices, and it is anticipated that rapeseed will follow those trends providing there are no hinderances to growing and harvest across Canada particularly. If you are yet to cover protein for the full winter period, then watching these markets would be advisable as there could be a buying opportunity during the lead-up to the South American harvests. Finally, positive news in the palm oil market, following Indonesia’s decision to remove their palm oil export ban in May, the government have now decided to increase the quantity of exports from the country. Since the 1st of June, palm oil prices are down over 30% and this is translating to the protected fat market (Megalac and similar), where we have seen prices decrease by £300-400/T already. More widely, recessionary fears are also being priced into markets, with exchange rates remaining a factor for UK importers of grain, particularly from America should the pound become weaker. This will remain another watchpoint as we gather UK and European harvest data and the market awaits the outlook from the US world agricultural supply estimates. For advice in understanding markets or for help in booking tonnages for the winter, please don’t hesitate to get in touch!
Charlie Davies 07904 601104 charlie@kellyfarmconsulting.com
Laura Cureton 07399 117257 laura@kellyfarmconsulting.com
Sam Kelly 07777 696080 sam@kellyfarmconsulting.com Office 01454 614624