RATION costs remain at relatively high levels, and there is little sign of an immediate retreat in feed prices as the northern hemisphere harvest starts to come in.
The wheat market in the UK is now largely treading water until a clearer picture of this year’s harvest has built up.
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Farmers and traders alike want to know how much grain has – or is likely to be – brought in, what the quality is like and what the dynamics of the world market will be like in the coming months.
Accordingly, although UK feed wheat strengthened by £3-4/t in early July amid worries about the effects of dry weather in a number of regions, it has since levelled off and currently lacks direction.
There is general confidence about a good level of supplies for the new season, but the fine-tuning has yet to start.
Even so, wheat is not currently cheap in the UK, being well above last year and shadowing the movements of two years ago (see chart).
Currently, a lot of attention is focused on Russia, which is the world’s leading exporter of wheat, and where the harvest is half-way complete.
Recent estimates for the Russian harvest have been adjusted upwards, but the true situation won’t be known until the spring wheat starts to come in, which is the part of the crop most likely to have suffered from the dry conditions.
Soya is similarly tracking sideways with only minor fluctuations for a couple of months now. Very little has altered the overall picture of substantial supplies going forward.
The US-China trade dispute is still unresolved, and most recently, the global price has been boosted by demand in the US for soya oil for biodiesel.
Grain Market Drivers
|↑ SOYA – Strong demand for biodiesel is supporting prices|
|→ WHEAT – Slow farm sales in Europe and lack of firm news about harvests is allowing the market to drift.|
|↓ SOYA – the condition of the US crop is rated good-to-excellent while the Brazilian crop for 20/21 is expected to set a record.|