Feed ingredient prices have been on the rise since the summer’s end, ending any hopes of immediate relief on feed costs.
Although soya now appears to have peaked, for the time being, wheat prices could yet have further to go and are still below the levels of the second quarter of the year.
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Our Basic Layers’ Ration has climbed for the third month after hitting a low point in July (see chart). Since then, the ration rice us up by £24/t but remains down by £37/t on its May high.
Still driving the global wheat price is the escalating situation in Ukraine, with traders lacking confidence about the future reliability of vital shipments through the Black Sea.
Also, anchoring the price of wheat is the firm market for maize, where yield estimates for the US crop have been marked down.
On top of all this is the effect of the weakness of Sterling on prices in the UK.
Further ahead, the possibility of a global recession is entering into the equation as a potential bearish factor on prices but, to date, this is not having a measurable impact.
A different set of factors is in play on soya prices, with Chinese buying behaviour typically playing a dominant role.
Heavy buying by China in the second half of September helped to drive soya prices higher.
Now the outlook has shifted into reverse, following the latest data from the USDA and Argentina, indicating that higher supplies will put prices under pressure.
In the US, stocks are 7% higher than this time last year. In Argentina, an increase in the planted area could raise output this year by 15-16%.