Ration costs are down another £5 a tonne or so, after wheat and soya costs drifted lower during June.
UK feed wheat slipped an average £6/t during the month, while soyameal eased back by £3/t.
It brings down the cost of our Basic Layers’ Ration to £272/t, although these price reductions are still relatively minor in the context of historical price levels.
The basic ration remains well above the typical cost over the last two years and in June was £36/t higher than a year earlier (see chart below).
Although the trade shows no sign of moving strongly in any direction, for now, this also means it looks unlikely to fall back to its former level.
UK feed wheat has been moving sideways now for eight months and is still nearly £58/t higher than two years ago.
Soyameal has been more volatile for 10 months or so but is similarly around £53/t up over the two years.
Current indicators suggest a slightly bearish trend for wheat prices, but more bullish for soya.
This is to some extent due to the recent planting decisions in the US, which have tipped more towards maize and away from soya.
This has weakened the outlook for maize, and it is a tight maize outlook that has done a lot to support wheat prices globally for the last few months.
The USDA raised its forecast for maize acreage by over 2% at the start of July, but this was less than expected by traders, so prices remained relatively firm.
Meanwhile, wheat output is expected to exceed demand over the coming marketing year, putting a lid on further increases.
Overall, the cereals market is finely balanced moving forward and any price movements are likely to be governed by weather and crop news.
Although soya has lost a little ground over the past month, the prevailing trend is set to bullish once more, due to a lower-than-expected US acreage in the US and worries about dry weather in key growing areas.
GRAIN MARKET DRIVERS
↑ SOYA – Disappointing acreage planted in the US.
↑ SOYA – Possible US crop setback from dry weather
↓ WHEAT – A surplus over consumption is the key factor for coming months.
↓ WHEAT – Lack of support from a less bullish maize trade.