DESPITE earlier expectations of a well-supplied market for soya this season, the spot price of soya meal has soared since August.
UK average prices have gained another £50/t in November alone and have reached £410. The net increase since August has now been £94/t.
Likewise, a generally bearish sentiment towards wheat globally for much of this year has proved misleading. UK spot prices for feed wheat have climbed month-on-month since May.
November saw an extra £10/t added to the average UK price to reach £188.50 (ex-farm), while the net gain over six months has been £36/t.
Soya prices were last at this level in spring 2014, and in the case of wheat, in the summer of 2013.
The result is that the typical cost of our Basic Layer’s Ration has now climbed to its highest level since the first half of 2013, and more than £50 higher than the average for last year.
The main driver for soya in recent weeks has been export demand for US soya, to take the place of Brazilian beans due to the delayed harvest there.
Another factor has been the tightening of world supply estimates. Closing stocks in the US are expected to be the lowest for seven years.
Latest estimates put the US soya crop down a further 2.7m tonnes for 20/21, and the Argentinian crop by 2.5m tonnes due to a smaller-than-anticipated planting area.
So, where from here? For soya, weather in South America is the main concern at present. Continued dry conditions could push the market higher still.
The dry conditions in Argentina have also been a factor in the upward movement in wheat prices, reinforced by a busy time on the international export market for grains of all kinds, including wheat exports from the EU.
However, a first-rate Australian wheat harvest is due to arrive in the coming months:
“The general sentiment is a cautious sense of optimism, with hope that we will see a break in prices during January,” Humphrey Feeds said in its latest update.
|GRAIN MARKET DRIVERS|
|↑ WHEAT – Vigorous global demand for grains|
|↑ WHEAT – Concerns about the impact of dry weather on the harvest in Argentina.|
|↑ SOYA – Late Brazilian harvest|
|↑ SOYA – Dry weather delaying South American plantings.|
|↑ SOYA – Lowest closing stocks for seven years.|