A sharp surge in the price of both wheat and soya has taken the spot price of a basic ration to a five-year high.
UK feed wheat ex-farm is up by £11/t over the past month and soyameal by around £54/t.
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The result was a £30/t lift in current formulation costs to £258/t by the end of September. Compounders’ prices will tend to respond more slowly with the benefit of forward buying, but the immediate outlook is not as favourable as it was a month ago.
For feed wheat, the trend both at home and globally has sharpened prices.
Average UK pricing has risen week-on-week since late August as the setback suffered by the UK wheat crop became more evident.
By the start of October, the UK price touched £179/t, the highest level for seven years.
Latest estimates suggest a wheat harvest down by nearly 40% on last year.
This would represent the smallest wheat crop since 1981, according to the AHDB.
There were also upsets on the international market with prices driven upwards by strong demand from importers, concerns about dryness in Argentina and the Black Sea area, and a knock-on effect from hardening maize prices.
Most recently, they moved up again in response to the quarterly USDA report which lowered maize stocks by 10% and wheat stocks by 8%, cancelling news of higher Russian output.
Soya has also been climbing despite the earlier predictions of plentiful stocks.
Heavy buying by China has led the price rises, while the dryness in South America has impacted on soya prices as well as wheat.
Also, the latest USDA report has predicted lower end stocks than expected.
“There is still currently a surplus of soya globally with the 20/21 US soya plantings predicted to be up 4.9% from this year.
“But because the market had so much of the good news factored into prices for so long, any adverse crop news or demand increase news is likely to cause these sharp rallies,” Humphrey Feeds said in its latest update.
|GRAIN MARKET DRIVERS
|↑ WHEAT – Dry conditions in South America and the Black Sea. UK prices expected to stay at a premium to world prices after the reduced harvest.
|↓ WHEAT – Estimates for world wheat production have been increased once more, and prices are already high
|↓ SOYA – After recent rises, a global surplus for 2020-21 is still expected.