Wheat and soya prices experienced some strong rallies during the holiday period, although these were driven mainly by anxious fund managers against a backdrop of little real activity.
Underlying markets are showing relative stability, with no new factors coming into play in recent weeks.
Global feed wheat prices hardened the week before Christmas but slipped back by the month’s end.
Meanwhile, soya surged to its highest level yet (see chart) but is also expected to fall back again.
Forward indicators for the wheat trade are set to neutral or even downwards.
Cheaper Black Sea wheat shipments are having a significant impact on the market, along with a record Australian crop and continuing concerns about lower demand from the economic downturn.
Further ahead, though, there are worries about the likely impact of the cold, dry weather on the next US crop.
Soya is trending neutral, but in the longer term, prices may ease.
Although the persistent drought in Argentina is a headline issue for the trade, supplies are likely to be well covered.
“Looking purely at crop fundamentals, the markets are very much on a downward trend,” commented Humphrey Feeds.
Feed Market DRIVERS
- ↑ WHEAT – (longer term) Possible damage to developing US crop due to extreme winter weather
- ↑ SOYA – Soya plantings in Argentina are behind schedule due to high temperatures and lack of rain.
- ↓ WHEAT – Black Sea shipments keeping EU prices capped
- ↓ WHEAT – Big Australian crop
- ↓ WHEAT – Recessionary worries
- ↓ SOYA – Heavy Brazilian crop
- ↓ SOYA – The resurgence of Covid could weaken demand from China.